I was always told growing up that if you wanted to feel confident, you first needed to look confident. Well, it may not have worked for me in high school, but Germans are both looking and feeling confident these days.
On Monday, the Ifo Institute announced that its business climate measure – a key indicator of German business confidence – improved for the fourth straight month in February, suggesting continued economic growth.
Consumer sentiment is also on the rise. According to market research firm GfK, it will reach 9.7 in March: the highest it’s been since October 2001. GfK said, „Despite the ongoing crisis in eastern Ukraine and uncertainty as to whether Greece will remain in the eurozone, Germans remain confident that their economy is clearly on course for growth.”
And they have good reason. On Thursday, the Federal Labor Agency announced that German unemployment dropped by about 20,000 in February, twice what economists were predicting. And according to data released Tuesday by the Federal Statistics Office, stronger domestic demand was a key driver of growth in Germany in the fourth quarter, along with foreign trade.
I don’t know about you, but I’m feeling pretty confident in Germany as a place to invest my money.
The Major Indices
Bigger was better so far this week, as the large-cap indices showed the biggest gains. As of Thursday’s close, the DAX index was up 1.6%, with its fellow large-cap EuroStoxx 50 up nearly as much: 1.5%. The MDAX and TecDAX were just behind, up 0.9% and 1%, respectively, while the small-cap SDAX was far in the rear, rising just 0.07% for the week. The overall HDAX was up 1.4%.
TOPS and FLOPS for the week
FLOP: Shares of Gerry Weber International AG (ETR:GWI1) (FRA:GWI1) gave back nearly 8% on Thursday, after the fashion designer reported earnings that weren’t all that bad, honestly. While revenue and earnings per share (EPS) stayed roughly flat, gross margins climbed from 53.7% to 57.4%. The firm plans to leave the dividend unchanged at 0.75 EUR per share. Clearly, investors were expecting better.
FLOP: Telecom QSC AG (ETR:QSC) (FRA:QSC) was down more than 10% on Monday after announcing a net loss of 34.4 million EUR in 2014, based on preliminary figures. The company turned a profit of 23.6 million EUR in 2013, making the loss even more staggering. Revenues were down by some 24 million EUR, although orders – some of which will be fulfilled this year – were up. The firm expects a stronger performance in 2015, helped by a cost-cutting program expected to save 25 million EUR. If you agree, now might be a good time to buy.
TOP: Fresenius Medical Care AG & Co. KGaA (ETR:FME) (FRA:FME) was by far the biggest winner on the DAX this week, up more than 10%, more than twice the gain of any other stock on the index. Shares of the dialysis equipment maker are now trading at record highs. Naturally, such a big jump was due to a better-than-expected earnings report. The company reported EPS of $0.56 for the quarter, beating the consensus estimate of $0.49, and $4.32 billion in quarterly revenue, compared to a consensus estimate of $4.23 billion. Quarterly revenue was up 11.7% year-over-year. The company seems to be firing on all cylinders.
FLOP: Yet another bad week for Deutsche Lufthansa AG (ETR:LHA) (FRA:LHA). The stock continues to slowly but steadily decline, down nearly 2% so far this week. Late last week, the company revealed dismal 2014 numbers, it announced it would suspend its dividend, its union woes continue, and the competition from low-cost and Middle Eastern carriers isn’t going away any time soon. The silver lining? In my opinion, things can’t get much worse. While it would be a risky move, this might be the time to buy in on hopes of a turnaround.
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John Bromels has no positions in any of the stocks mentioned. The Motley Fool does not own shares of any of the stocks mentioned.