Stocks Rise a Bit as Bundesbank Stands Pat
FRANKFURT -- Stocks opened higher after yesterday's mild profit-taking but slipped off their highs as the
Bundesbank
failed to cut interest rates.
Despite the widespread acknowledgment that the German central bank wouldn't cut rates today, the news hurt stocks and moved currencies as well, indicating that some traders had taken long positions just in case. The dollar rose near 1.66 marks before slipping back to 1.6468.
In Frankfurt, the
Xetra Dax
was down 10 points at 4524, while in London the
FTSE
was up 24 at 5231 and in Paris the
CAC
was up 4 at 3445.
S&P 500
futures were up 1.20 at 1074, while U.S. long bond prices were little changed, with the yield at 5.06%.
Gary Dugan, European equities strategist at
J.P. Morgan
in London, said his bearish stance had not been swayed by the recent rally. He said the economic picture across Europe is turning more negative with each passing week, and he expects this to hit company profits.
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"There are still a lot of black holes lurking out there in coming months," he said. He believes most of the recent gains came on buying by traders looking for short-term profits, and that a lot of longer institutional buyers have been more cautious.
Among the biggest losers today were
Deutsche Telekom
(
(DT) - Get Dynatrace, Inc. Report
DT ADR), down 5.7% on a magazine report that it will suffer a steep decline in profits next year. And
Daimler-Benz
(
(dai)
DAI ADR) was down 2%. Daimler chief said in a magazine interview that a recession might soon hit the auto industry.
Among the biggest gainers today was German telecom
Mannesmann
, which rose 7.6% on a news report that its head expects a sharp increase in 1998 sales. European software makers enjoyed spillover from strong tech gains yesterday on Wall Street, with
SAP
(
(SAP) - Get SAP SE Report
SAP ADR) up 5.8% and French software maker
Cap Gemini
up 3.4%.
Demand for most banks stocks continued firm enough to keep many in positive territory today, partly on hopes that the Bundesbank and other core Euroland banks will cut rates in coming weeks.
Dresdner Bank
was up 2%,
Paribas
up 1.6% and
Lloyds
up 1.4%.
