DAX watch: German equities edge higher as oil, euro support index

on Mar 27, 2015
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German companies outperformed the majority of their European peers in morning trade in Frankfurt today, as oil supply fears over the conflict in Yemen calmed, pressuring crude prices. Meanwhile, the euro continued to fall against the dollar, as traders eyed US GDP figures and a speech by Fed chair Janet Yellen.

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The Dax was up 0.60 percent at 11,914.50 points as of 11:35 GMT, though it was still down about one percent for the week. Meanwhile, the Dow Jones Euro Stoxx 50 rose 0.35 percent to 3,682.50 and is also on track to record a one percent intraweek drop.
Fears that fighting in Yemen could force the closure of the Bab-el-Mandeb strait, a key shipping route for Middle East oil, had pushed crude prices up by several percent on Thursday. Worries, however, had subsided as trade opened today, forcing crude futures to retreat, which boosted the share price of companies that benefit from lower oil prices, with airlines finding the most support.
Meanwhile, the euro was again on the wane this morning, losing 0.45 percent against the dollar to 1.0836 as of 11:03 GMT, adding to the 0.8 percent loss from Thursday. The greenback was well supported after the number of US weekly jobless claims scored a five-week low yesterday, and Markit’s services PMI came in at a six-month peak. Growing fears of a Grexit further weighed on the euro, supporting export-heavy German equities.
Adidas was the top DAX gainer this morning, with the sportswear company adding 5.36 percent as of 11:29 GMT to €74.815, as it headed for a six percent gain for the week. The company revealed earlier this week that it plans to revolutionise its production process, bringing it back to Europe as it introduces robotics-focused facilities. The new production plans were reflected in new projections of near-50 percent revenue growth by 2020.
The second-top gainer in Germany this morning was Deutsche Lufthansa AG, with the airline climbing 2.02 percent to €13.248. However, the company endured significant losses earlier this week, and still stands to lose about five percent since last Friday. The crash of Flight 4U 9525, operated by Lufthansa-owned Germanwings, in the French Alps and the oil rally caused a plunge in the airliner’s stock. Suggestions by airlines to install new safety protocols and the retreat of crude prices, however, prompted Lufthansa stock to recover some ground today.
Meanwhile, the top losers in the Dax, and in fact the only two companies to stand in the red as of 11:29 GMT, were RWE and E.ON. RWE was 0.68 percent lower at €23.993, heading for a 2.5 percent weekly retreat, while E.ON dipped 0.44 percent to €14.047.
Analysts are now looking ahead to upcoming final data on US Q4 GDP growth, which is expected to come in at 2.4 percent on an annual basis, after a 2.2 percent preliminary reading in February. Also in focus is a speech by Federal Reserve chair Janet Yellen later today, which could offer further direction to the dollar.

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