German Stocks Drop From Record on Sentiment Data, China
Commerzbank AG (CBK) headed for its lowest price in at least two decades after announcing details of its capital increase. Siemens AG (SIE) fell for the first time in six days as Goldman Sachs Group Inc. predicted the company will miss its next-year profit target. Merck KGaA (MRK) and Deutsche Post AG rose after reporting earnings that exceeded analyst forecasts.
The DAX Index (DAX) dropped 0.4 percent to 8,249.13 at 11:12 a.m. in Frankfurt. The benchmark rallied for three successive weeks as companies reported better-than-forecast results and optimism increased that central banks will maintain economic stimulus. The broader HDAX Index retreated 0.3 percent today.
“Markets in Europe are reacting to slower growth expectations in Europe and potential downward growth revisions in China,” Ion-Marc Valahu, co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “So far, it is more of a buyers’ fatigue than the start of a new downtrend.”
German investor confidence rose less than economists forecast in May. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, increased to 36.4 this month from 36.3 in April. Economists forecast a gain to 40, according to the median of 38 estimates in a Bloomberg News survey.
JPMorgan Chase & Co. reduced its second-quarter growth forecast for the Chinese economy to 7.8 percent from 8 percent and the full-year estimate to 7.6 percent from 7.8 percent. It cited weak domestic demand signaled by the April data for industrial output and fixed-asset investment.
Commerzbank dropped 2.4 percent to 9.70 euros, heading for its lowest price at least since August 1992. Germany’s second-biggest lender said it will raise 2.5 billion euros ($3.25 billion) in the fifth capital increase in four years as it seeks to repay debt from a government rescue. The company is offering 20 shares for every 21 held by investors at 4.50 euros apiece.
Deutsche Bank AG, the country’s largest bank, lost 1.6 percent to 35.51 euros.
Siemens dropped 1.2 percent to 80.74 euros. Europe’s biggest engineering company will achieve so-called sector profit of 10.7 percent in the year to end September 2014, missing its own target of 12 percent, Goldman Sachs analysts wrote in a note dated yesterday. They cut their price estimate for the stock by 11 percent to 80 euros.
Merck advanced 0.6 percent to 123.35 euros, its highest price since it sold shares to the public in 1995. The German maker of cancer drug Erbitux forecast it will reach 2014 targets a year before schedule.
First-quarter net income increased 54 percent to 266 million euros, the company said. Earnings excluding costs such as writedowns and merger expenses totaled 2.11 euros a share, beating the 2.05-euro average estimate of seven analysts surveyed by Bloomberg.
Deutsche Post AG (DPW) rose 3.3 percent to 19.45 euros, its highest price since June 2008. Europe’s largest postal service said first-quarter net income fell 5.9 percent to 498 million euros from a year earlier. Earnings exceeded the 441.6 million-euro average of five analyst estimates compiled by Bloomberg.
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