German Stocks Little Changed as Investors Await Fed Signs
German stocks were little changed as a report showed U.S. housing starts rose less than forecast last month and investors awaited signs from the Federal Reserve on whether it will begin to pare stimulus measures immediately.
Bayerische Motoren Werke AG (BMW) fell 1 percent after a report showed it sold fewer cars in the European Union last month. Kabel Deutschland Holding AG (KD8) increased 3.7 percent after saying it received a preliminary bid from Liberty Global Plc. Deutsche Boerse AG rose 2 percent after the operator of the Frankfurt stock exchange said it will seek 70 million euros ($94 million) in costs savings per year by 2016.
The DAX Index (DAX) added 0.2 percent to 8,229.51 at the close of trading in Frankfurt. The equity benchmark lost 1.5 percent last week on concern that the Fed will start to slow the pace of its monthly bond purchases as early as September. The broader HDAX Index advanced 0.2 percent today.
“Now the U.S. economy is on the path of a sustainable recovery, we expect the Fed will stop flooding the market, leaving financial markets running without crutches,” Societe Generale SA strategists led by Alain Bokobza wrote in a note. “The Fed is likely to begin cutting large-scale asset purchase programs in September, and should be done with QE3 no later than January 2014.”
The DAX has lost 3.5 percent from a record on May 22, as Fed Chairman Ben S. Bernanke said the central bank could pare its third round of quantitative easing, known as QE3, if the U.S. economy improves sustainably. The Fed begins its two-day policy meeting today, with Bernanke scheduled to speak after its policy decision tomorrow.
Housing starts in the U.S. climbed 6.8 percent to a 914,000 annualized rate after a revised 856,000 pace in April, the Commerce Department reported today in Washington. The median estimate of 82 economists surveyed by Bloomberg called for a 950,000 rate. Applications to build one-family homes increased 1.3 percent to a 622,000 pace, the fastest since May 2008.
A separate report showed German investor confidence increased this month more than economists predicted. The ZEW Center for European Economic Research in Mannheim, Germany, said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 38.5 in June from 36.4 last month. The median projection in a Bloomberg survey had called for an increase to 38.1.
BMW lost 1 percent to 69.87 euros. The world’s biggest luxury carmaker sold 6.6 percent fewer cars in Europe in May, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today.
Daimler AG, the third-biggest maker of luxury cars, fell 0.9 percent to 47.18 euros.
Kabel Deutschland jumped 3.7 percent to 85.51 euros, its highest price since it sold shares to the public in March 2010. Liberty Global Plc made a preliminary bid for Kabel Deutschland, setting itself against Vodafone Group Plc for control of Germany’s largest cable provider.
Liberty offered about 85 euros a share, valuing the Munich-based company at 7.5 billion euros ($10 billion), according to a person familiar with the talks, who asked not to be identified because the discussions are private.
Deutsche Boerse gained 2 percent to 49.20 euros as it said at an investor day in Frankfurt that it will cut about 140 staff through voluntary redundancies as part of its cost-saving plan.
Commerzbank AG rose 2.1 percent to 7.54 euros. Germany’s second-largest lender plans to cut more than 5,000 jobs, Handelsblatt reported.
The bank’s board and employee representatives reached an agreement on group-wide job cuts, according to an e-mailed extract from an article to be published in the newspaper today, citing two people it didn’t name who are familiar with the negotiations.
The volume of shares changing hands in companies listed on the DAX was 27 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.
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