A weakening euro against the dollar, some recovery in oil prices and strong base metal prices are helping prop up European equity markets, including the DAX 30, after losses were experienced over the first couple of hours of the session. After opening flat, very fractionally above yesterday’s close, the DAX lost 0.45% over the first couple of hours of morning trading before staging a recovery in the run up to midday. The German benchmark index is currently holding onto a modest gain of just over 0.2% as we move into the afternoon.
There are a number of companies showing strong gains today with energy utilities Eon and RWE leading from the front with impressive returns of 3.6% and 3.07% respectively. Eon yesterday gave short shrift to calls from an activist investor who owns 1% of Eon, that the company spin off its energy distribution business as a stand-alone company. Knight Vinke, an American investment management firm and the investor in question, asserted that a pure network business would be hugely popular with dividend-seeking investors and more valuable than the current company which combines energy distribution, retail and renewables. Eon already span off the fossil fuels part of its business operations in September with the new company, Uniper, now a separate listing on the Frankfurt stock exchange. A company spokesman responded to the calls by reminding Knight Vinke that the company’s annual meeting in June last year saw 97% of shareholders support the current company structure.
Volkswagen has seen its share price gain 3% today as it nears a deal with U.S. authorities to settle the case brought against the company after it was uncovered that it had manipulated emissions tests for its diesel models sold in the U.S. Daimler is up 1%. Figures released earlier this week showed that Daimler had leapfrogged BMW for global sales volumes in the luxury car segment for the first time since 2004. The company sold 2.23 million Mercedes-Benz cars, including the Smart brand. BMW is still ahead on overall sales figures, having sold 2.37 million vehicles, however, the 360,233 MINI vehicles that are part of that figure are not considered to form part of the luxury segment. BMW is down 0.42%.
Steel maker ThyssenKrupp is up 2.86% with steel stocks enjoying a strong rally today on news that China has announced that it will move to close the country’s induction furnace steel making facilities over the course of 2017. These facilities produce low grade steel, usually recycling scrap. Most such facilities are illegal and violate environmental regulations but account for around 9% of China’s steel output. The crackdown is raising the prices of Chinese steel which, as the world’s largest producer, provides the floor for global steel prices. Subsequently, international steel prices are expected to rise over the coming months. Mass media company ProSiebenSat.1 Media is also having a good day, up 2.05% while Deutsche Bank is 1.53% to the good and peer Commerzbank flat with an incremental 0.07% gain for now.
The day’s heaviest faller so far has been Siemens, which had a very strong day yesterday on a statement that Q4 performance had been very strong. Analyst comments that the engineering company’s revenue outlook over the next couple of years would likely be better than expected due to a record backlog of projects with good margin potential also helped. Today’s session, however, has seen the share price fall back by 1.23%. FMCG giant Beiersdorf, which manufactures personal care products and owns brands such as Nivea and Elastoplast, is down 1.25%.