German Stocks Advance to a Record as Utilities RallyNamitha Jagadeesh
German stocks rose to a record, with the benchmark DAX Index posting a fourth day of gains, after the World Bank increased its estimate for global growth in 2014.
Deutsche Lufthansa AG rallied to its highest price since December 2007 after Citigroup Inc. named the stock as one of its top picks among European airlines. RWE AG advanced 2.9 percent after Natixis SA said a court ruling yesterday on one of its nuclear plants was favorable to the utility company. Commerzbank AG added 3 percent after Berenberg Bank said the lender would benefit from faster economic growth in Europe.
The DAX Index jumped 2 percent to 9,733.81 at the close of trading in Frankfurt, its biggest gain since September. The benchmark gauge has advanced 3.3 percent since Jan. 9 as the U.S. unemployment rate unexpectedly fell and banks and utilities rallied. The broader HDAX Index added 1.9 percent today.
“I’m quite positive on German stocks in the near term,” said Pierre Mouton, who helps oversee $6 billion as a portfolio manager at Notz, Stucki & Cie. in Geneva. “The market is quite cyclical, so they should do well. The U.S. economy should surprise on the upside, maybe by a big margin. Europe is healing and will do better.”
The World Bank forecast that the global economy will expand 3.2 percent this year, compared with its June projection of 3 percent and up from 2.4 percent in 2013. The bank estimated growth of 3.4 percent in 2015, up from its earlier prediction of 3.3 percent.
In Germany, a release by the Federal Statistics Office in Berlin showed that gross domestic product rose 0.4 percent in 2013, from a 0.7 percent increase in 2012. The median estimate of economists surveyed by Bloomberg was for a 0.5 percent gain.
The Federal Reserve releases its Beige Book business survey after European markets close today. The survey contains anecdotal reports on the U.S. economy from its 12 districts. The Fed next meets on Jan. 28-29. The central bank decided at its December meeting to start reducing the pace of asset purchases by $10 billion to $75 billion this month.
The volume of shares changing hands in DAX-listed companies was 58 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
Lufthansa advanced 4.4 percent to 18.54 euros after Citigroup said it offers the best value among European airlines. Shares in the carrier rose 8.3 percent last year, compared with a 117 percent gain for International Consolidated Airlines Group SA, the parent of British Airways.
Citigroup analysts Andrew Light and Nithin Pejaver said they expect Lufthansa to post “substantial earnings improvement in 2014.”
RWE, Germany’s second-biggest utility, rose 2.9 percent to 27.60 euros and EON SE, the largest, added 2.2 percent to 13.80 euros. Nuclear-power plant operators will benefit from a court ruling yesterday that the state of Hesse unlawfully forced RWE to shut down its Biblis facility, Natixis wrote in a note.
Commerzbank gained 3 percent to 13.77 euros, its highest price since April 2012. Berenberg Bank said that economic growth of more than 1 percent and closer to 2 percent in Europe would benefit Germany’s second-biggest lender. The brokerage analysed how 11 different scenarios would affect shares in the region’s banks.
Volkswagen AG, Europe’s biggest automaker, rose 2.5 percent to 202.70 euros as a gauge of European automakers posted the biggest gain of the 19 industry groups on the Stoxx 600 Europe Index. Bayerische Motoren Werke AG, the world’s largest maker of luxury vehicles, advanced 1 percent to 84.96 euros.
QSC AG declined 2.4 percent to 4.57 euros after JPMorgan Chase & Co. lowered its recommendation on the technology-outsourcing company to neutral from overweight, similar to buy.
“2014 will be another year of transition, resulting in reduced forecasts, which in our view could cause some near-term disappointment,” analyst Hannes Wittig wrote in a note.
Deutsche Boerse AG, operator of the Frankfurt Stock Exchange, dropped 1.2 percent to 60.70 euros. European Union lawmakers yesterday reached a deal on tougher market legislation in the region, including curbs on high-frequency trading and commodity derivative speculation.