DAX Leads Developed Markets Advance with 30% Surge

Barry Randall
27 Dec, 2012
New York City

European markets traded higher and DAX index in Germany is set to lead the regional advance with a surge of 30%. BMW is expected to exceed 2011 profit and Audi unit of Volkswagen plans to spend

[R]4:30 PM Frankfurt – European markets traded higher and DAX index in Germany is set to lead the regional advance with a surge of 30%. BMW is expected to exceed 2011 profit and Audi unit of Volkswagen plans to spend €13 billion in new products development and manufacturing expansion.[/R]

European markets traded higher on the hopes that U.S. lawmakers will resolve budget differences and China reported industrial production increase accelerated in December.

In European trading, FTSE 100 index gained 27.2 or 0.5% to 5,981, DAX index added 32.6 or 0.4% to 7,669 and CAC 40 index gained 0.8% or 27.9 to 3,681.

DAX index is set to close up 30% in the year after falling 14.7% in 2011. The DAX led the regional advance after investors recalibrated their expectations after the European Central Bank pledged to support the euro at all cost in late summer.

Industrial profit in December increased to 22.2% in November from 20.5% in October, according to the data released by the government.

Italy sold €8.5 billion of 177-day bills in auction today that averaged 0.949% compared to 0.919% at the previous auction on November 28.

Italy is scheduled to raise as much as €6 billion in 5- and 10-year bonds tomorrow. The yield on 10-year bond rose 4 basis points to 4.51%.

British Banker’s Association said UK mortgage approvals in November increased to the highest level since January to 33,634 from 33,128 in October. Net lending in the month increased 164 million pounds.

Stocks in Review

Assa Abloy AB added 2% to 244.55 kronor and it agreed to acquire Texas based 4Front Engineered Solutions Inc for an undisclosed amount. 4Front is estimated to generate revenues of $165 million in 2012.

Bankia, the Spanish bank under government supervision, tumbled 19% to €55.75, the lowest in six months. Spanish bank rescue fund said its parent bank has negative value of €10.4 billion.

BMW gained 1% to €73.45 after a report Die Welt publication noted that Chief Financial Officer Friedrich Eichiner said that he is confident that the automaker has crossed the 2011 profit.

Clariant increased 3% to Sfr12.20 after the specialty chemical maker sold units for Sfr502 million. The company sold one unit to a U.S. based leveraged buyout company SK Capital Partners.

Evraz Plc gained 1.8% to 259 pence after the steel maker received anti-trust approval to increase its stake in Russia coal miner OAO Raspadskaya.

Resource stocks gained after prices of base and precious metals increased in London trading. BHP Billiton Ltd added 0.7% to 2,156 pence and Rio Tinto Group added 0.9% to 3,541 pence.

Thomas Cook Group Plc extended gains by 6% to close at 47.50 pence after the company is estimated to exceed its sales target this year. The tour operator has launched a 10% discount to encourage UK travelers to book 2013 vacations early.

Thomas Cook stock has more than doubled since November and jumped three-fold in the year after the company was saved from a total collapse with emergency loans.

Volkswagen AG increased 0.9% €172.30 after the luxury unit Audi said it plans to spend €13 billion in new model development and manufacturing expansion.