German Stocks Advance Before U.S. Debt Ceiling Vote
German stocks advanced as euro-area consumer sentiment rose in January, and before the U.S. House of Representatives votes to suspend the country’s borrowing limit.
SAP AG (SAP) added 2.4 percent after saying full-year 2013 operating profit will rise at least 12 percent. Commerzbank AG and Deutsche Bank AG each fell 1.5 percent after the president of the country’s financial regulator said that splitting banks doesn’t eliminate all risks.
The DAX Index (DAX) climbed 0.2 percent to 7,707.54 at the close of trading in Frankfurt. The benchmark measure has gained 1.3 percent so far this year as U.S. lawmakers agreed on a compromise budget and American companies reported better-than- expected earnings. The broader HDAX Index also rose 0.2 percent.
“It’s in all interests to find a solution for the U.S. debt ceiling, so I don’t worry too much about that, I can’t see that this will be a big issue for the market right now as investor sentiment is getting more and more bullish,” Michael Kapler, an equities portfolio manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany, said. “First impressions for European earnings are quite constructive. SAP has done a good job over the last years in terms of positioning itself in the market, and the forecasts for this year are quite good.”
The volume of shares changing hands in companies listed on the equity benchmark was 6.3 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.
Euro-area consumer confidence rose for a second month in January. An index of household confidence in the currency bloc increased to minus 23.9 from a revised minus 26.3 in December, the European Commission in Brussels said in an initial estimate today.
That’s the second increase after sentiment reached a 3 1/2- year low in November as record unemployment and the recession weighed on confidence. Economists had forecast an increase to minus 26, according to the median of 30 estimates in a Bloomberg News survey.
In the U.S., the Republican-led House will vote today to pass legislation suspending the government’s $16.4 trillion debt limit until May 19. The bill will enable the federal government’s borrowing authority to increase to accommodate the amount the Treasury borrows during those three months.
By postponing a decision on raising the debt ceiling, Republicans plan to focus on other deadlines to seek deeper spending cuts from President Barack Obama and congressional Democrats. Lawmakers have until March 1 before automatic spending reductions start and until the end of that month to pass a bill to fund the government.
SAP added 2.4 percent to 59.20 euros as it forecast operating profit adjusted for some items to be in a range of 5.85 billion euros ($7.79 billion) to 5.95 billion euros, up from 5.21 billion euros in 2012. Cloud subscription and support sales will more than double this year to about 750 million euros, the biggest maker of business-management software said today.
The shares dropped 5.3 percent last week as the Walldorf, Germany-based company reported fourth-quarter earnings that trailed estimates on Jan. 15.
Draegerwerk AG & Co. surged 9.2 percent to 88.98 euros, its highest price since July 2011, after the medical and aerospace supplier said 2012 profit beat its own forecast. Earnings before interest and tax were as much as 9.7 percent of revenue last year, Luebeck, Germany-based Draegerwerk said in a statement late yesterday. That compares with a previous forecast in the range of 8 percent to 9.5 percent.
Aixtron SE added 8.5 percent to 11 euros, the highest price in almost four months. U.S. peer Cree Inc reported late yesterday that quarterly profit jumped 69 percent as demand for its light-emitting diodes surged.
Commerzbank, the country’s second-largest lender, lost 1.5 percent to 1.63 euros. Deutsche Bank, Germany’s biggest lender, dropped 1.5 percent to 35.40 euros.
A European Union-commissioned group’s proposal for a structural division of banks is not enough “to rid the world of systemic risks,” Bafin President Elke Koenig said in a speech in Frankfurt late yesterday.
TUI AG tumbled 5.4 percent to 7.51 euros after abandoning a potential merger with TUI Travel Plc (TT/), saying it wouldn’t be in its shareholders’ interests. The two travel companies last week said they were in preliminary talks to combine.
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