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Banking industry

German Stocks Advance as Goldman Sachs Lifts Stance on European Banks

Strategic Insights

— 1 min read

German stocks gained momentum on Thursday, led by a surge in shares of European banks, as Goldman Sachs Group Inc. lifted its recommendation on the sector to "modest overweight" from neutral. The DAX Index, Germany's benchmark stock index, rose 1.6% to 5,384.43, its biggest gain in two weeks, while the broader HDAX Index also gained 1.6%.

The advance in German stocks was fueled by a slew of positive analyst calls, with Goldman Sachs Group Inc. raising its year-end forecast for the Dow Jones Stoxx 600 Index to 260 from 235, and UBS AG strategist Nick Nelson increasing his target for the FTSEurofirst 300 Index to 1,100 from 1,000. Analysts at Goldman Sachs also noted that the market tends to make its strongest returns while the economy is still contracting, but tends to make further gains as the economy begins to expand.

Key Takeaways:

  • Goldman Sachs Group Inc. lifted its recommendation on European banks to "modest overweight" from neutral, citing a broadly cyclical bias.
  • The DAX Index rose 1.6% to 5,384.43, its biggest gain in two weeks.
  • Deutsche Bank AG and Commerzbank AG, Germany's biggest banks, climbed at least 3.5% after Goldman Sachs lifted its recommendation.
  • Daimler AG and Bayerische Motoren Werke AG, the world's largest makers of luxury cars, added more than 5% as investors saw potential for earnings growth.
  • Goldman Sachs Group Inc. raised its year-end forecast for the Dow Jones Stoxx 600 Index to 260 from 235.
  • UBS AG strategist Nick Nelson increased his target for the FTSEurofirst 300 Index to 1,100 from 1,000.

Statistics:

  • The DAX Index increased 1.6% to 5,384.43.
  • Deutsche Bank AG rose 3.5% to 48.50 euros.
  • Commerzbank AG jumped 4.7% to 6.98 euros.
  • Daimler AG surged 5.1% to 31.83 euros.
  • The Dow Jones Stoxx 600 Automobiles & Parts Index rose as much as 4.2% on Thursday.

Sources:

  • Bloomberg News
  • REUTERS
  • Goldman Sachs Group Inc. - a report dated yesterday
  • Bloomberg News - citing Labor Department data
  • Reuters - citing an interview with Chief Executive Officer Dieter Zetsche of Daimler AG
  • Shanghai Electric Group Co. - a statement on their website
  • Deutsche Telekom AG - a statement on their website

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