The Eurozone's anything but a bastion of growth these days, but the continent's steady foundation, Germany, delivered for investors this week. The German DAX (DAXINDICES: ^DAX ) picked up 1.3% this past week, notching the uptick after several reports of good economic news came out. Germany and Europe are still a long way away from escaping the dangers of recession, but that doesn't mean investors can't benefit.
Signs of economic hope
Germany, long the champion of austerity in debt-plagued Europe, continues to hold a tough fiscal line against its fellow eurozone members. The nation's leadership dismissed a plan by French president Francois Hollande this week to reform Europe's economic government, and Germany has staunchly opposed eurozone countries that have clamored for the bloc to pool debt in order to allay the continent's crisis.
For Germany, at least, the hard line is working. The country's unemployment still sits below 7%, and its economy grew 0.1% in the first quarter -- slow growth, to be sure, but light-years better than the devastating contraction occurring in other leading European economies. Even Europe as a whole has seen good news emerge this week: Regional exports increased for a third straight month to push Europe's trade surplus past economist predictions.
The EU also reported this week that April car sales increased about 1.7% -- the first rise since late 2011. Auto sales in Germany helped that figure in particular, gaining 3.8% in April to turn around a recent string of monthly declines. That gain helped Volkswagen (NASDAQOTH: VLKAY ) shares to standout gains this past week, when the stock picked up more than 5%. Germany's automaker grew European registrations by nearly 10% for the month, and it currently controls a 27% market share in the region. While Volkswagen has reduced its European exposure by making inroads into China and other markets, the significant portion of revenue the continent comprises makes improving regional sales a priority for VW's future.
Fellow German automaker BMW (NASDAQOTH: BAMXF ) has also followed the European auto market higher this past month: The stock has gained more than 10% in that time. The carmaker's total sales have hit an all-time high, gaining 5.7% this year, and the company has seen demand rise in areas such as the U.S. and China. Not everything is great for BMW, however: Volkswagen's Audi brand has overtaken BMW as India's leading luxury-car seller, although BMW remains the largest luxury-auto business worldwide.
Neither of these automakers has matched up with this week's leading German car firm, however. Shares of Daimler (NASDAQOTH: DDAIF ) rose more than 8% over the past week. However, Daimler has lagged behind its fellow German automakers, particularly in its Mercedes luxury brand, which recorded significantly smaller operating margins last year than BMW and Audi. Daimler's leadership said in April that it likely wouldn't be able to match last year's $10.5 billion operating profit, although the surprising rise in the European auto market could spur the company's sales. Still, with the company struggling in both Europe and North America, investors should be wary of buying in.
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