Benchmark DAX Index Drops for First Day in Four as Growth Trails Forecasts
German stocks fell, with the benchmark DAX Index (DAX) ending a three-day rally, after the country’s economy almost stalled in the second quarter.
RWE AG (RWE), Germany’s second-largest utility, dropped 2.7 percent as the country’s power fell. ThyssenKrupp AG (TKA) and Salzgitter AG (SZG) declined with metal prices. Solar Millennium AG (S2M) slumped 5.3 percent after announcing its chief financial officer is leaving the company.
The DAX slid 0.5 percent to 5,994.9 at the 5:30 p.m. close in Frankfurt, while the broader HDAX Index (HDAX) decreased 0.6 percent. The DAX has lost 20 percent since this year’s high on May 2 amid concern that the global economic recovery is stalling, while European leaders struggle to contain the sovereign-debt crisis. The measure is trading at 10.5 times its companies’ reported earnings, near the lowest valuation since 2008.
Germany’s gross domestic product, adjusted for seasonal effects, rose 0.1 percent from the first quarter, when it jumped a revised 1.3 percent, the Federal Statistics Office in Wiesbaden said today. Economists had forecast growth of 0.5 percent, according to the median of 33 estimates in a Bloomberg News survey.
A separate report today showed euro-area economic growth slowed in the second quarter more than economists had forecast. Gross domestic product in the 17-nation euro area rose 0.2 percent from the first quarter, when it increased 0.8 percent, the European Union’s statistics office in Luxembourg said. That’s the worst performance in two years. Economists had forecast the economy to expand 0.3 percent, according to the median of 34 estimates in a Bloomberg News survey.
“We’ll have a lower economic growth than we’ve had in the past,” said Heinz-Gerd Sonnenschein, an equity strategist at Deutsche Postbank AG in Bonn. “Sensitive stocks to economic growth are being hit today after the economic reports. Investors are very nervous, but the reaction might be too stormy and it might not be a bad moment to buy large stocks for the longer term.”
Stocks recouped some losses as Fitch Ratings affirmed its AAA credit rating on the U.S. and industrial production in the world’s largest economy climbed in July by the most this year.
Billionaire investor Warren Buffett’s Berkshire Hathaway Inc. made its biggest bets on the stock market of this year on Aug. 8 as the Standard & Poor’s 500 Index plunged the most since December 2008.
“I like buying on sale,” Buffett, Berkshire’s chief executive officer and head of investments, said in a television interview with Charlie Rose on PBS. “Last Monday, we spent more money in the stock market buying than any day this year.”
RWE lost 2.7 percent to 27.34 euros as baseload power for 2012 in Europe’s biggest market slid as much as 45 cents, or 0.8 percent, to 56.70 euros ($81.72) a megawatt-hour, according to broker data compiled by Bloomberg.
ThyssenKrupp, Germany’s biggest steelmaker, dropped 2.6 percent to 24.07 euros, while Salzgitter, the second-largest, retreated 2.3 percent to 43.87 euros. Copper, lead, tin and zinc all retreated on the London Metal Exchange today.
Infineon Technologies AG (IFX), Europe’s second-largest chipmaker, tumbled 2.2 percent to 6.06 euros.
United Internet AG (UTDI) dropped 3.1 percent to 12.36 euros. The internet provider may sell more of its stakeholdings after selling a stake in Versatel AG to a holding company controlled by funds advised by Kohlberg Kravis Roberts & Co., Chief Executive Officer Ralph Dommermuth said at a press conference in Frankfurt today.
Solar Millennium plunged 5.3 percent to 12.40 euros. The company said CFO Oliver Blamberger is leaving the company at his own request. Martin Loeffler will succeed Blamberger on an interim basis from Sept. 1, Solar Millennium said.
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