- European indices trade lower
- DE40 returns to short-term downward channel
- Pullback on defense sector stocks
European stock market indices trade lower today. German DAX trades 0.7% lower, UK FTSE 100 gains 0.1%, French CAC40 drops 0.6%, Dutch AEX declines 0.2% and Italian FTSE MIB plunges 0.9%. Defense stock are lagging, with Rheinmetall dropping around 9%.
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German DAX futures (DE40) attempted to break above the upper limit of the short-term bearish channel yesterday. Bulls managed to push the price above it but failed to sustain the momentum and the index is back within the channel now. Short-term technical outlook still favors bears and should declines continues, the first near-term support zone to watch can be found in the 18,350 pts area.
Company News
Rheinmetall (RHM.DE) as well as other European defense companies are pulling back today, with German companies shares plunging 9%. There was no negative news to justify the drop. On the contrary, Bloomberg reported that Germany plans to order ships and armor vehicles worth €7 billion as well as report on approval for Rheinmetall for further infantry fighting vehicle deliveries to Ukraine. Defense companies, including Rheinmetall, have been performing very well recently and today's pullback could be driven by profit taking following recent rally, and may be just a correction. Also a note from Goldman Sachs suggesting that the sector is trading at peak multiples is providing fuel for a sell-off.
Daimler Truck (DTG.DE) reported a 13% drop in Q1 2024 sales. In unit terms, Daimler Truck sold 108,911 trucks in the first quarter, compared to 125,172 a year ago. The company said that lower sales reflect normalization in global truck markets as well as weakness in key Asian markets.
Analysts' actions
- Hugo Boss (BOSS.DE) rated 'buy' at Bankhaus Metzler. Price target set at €86.00
Rheinmetall (RHM.DE) launched today's trading higher but have erased all the gains shortly after session launch and plunged later on. Stock was trading as much as 12% lower on the day at one point but has managed to recover. Source: xStation5
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