European Stocks Soften Despite US-China Trade Talks: DAX Loses Pace
China-US Dialogues: Dax's Unclear Financial Gains
The ongoing trade talks between the US and China didn't bring much relief to European stock markets over the weekend, with the EU pressing for its own deal. This hindered the DAX's momentum, and the markets ended the day in the red.
DAX Dips as EU Needs its Own DealThe DAX slipped 0.5% to 24,174 points, while the Euro Stoxx 50 dropped 0.2% to 5,422 points. Markets were subdued due to low trading volumes on Pentecost Monday. Wealth manager Thomas Altmann of QC Partners noted that a few large orders could significantly impact the market on such days.
Europe Misses out on US-China Deal BenefitsThe European stock market failed to capitalize on the US-China trade talks held in London. A trader expressed doubts about the prospects of a new deal, adding that the EU needs its own deal. Another market participant acknowledged that the DAX had temporarily lost its relative strength. Even the relatively positive US jobs report on Friday failed to perk up sentiment in Europe, as many positive catalysts seem to be already priced in.
Consolidation in the Armament Sector
Individual stocks in the armament sector showed signs of consolidation. Rheinmetall fell 0.8%, with Hensoldt dropping 2.5%, and Renk falling 1.5%. Despite the upward trajectory in NATO member countries' defense budgets aiming to hit 3.5% of GDP, a seasoned market participant suggested that we might be entering a longer consolidation phase, as the positive catalysts are already factored in.
SAP and Other Notable Movers
SAP, a DAX heavyweight, slid 1.7% to €267.60. After a lackluster performance in breaching the range between €256 and €270, the stock is currently experiencing chart-driven selling. Siemens Energy also took a hit, falling 2.9%, while Adidas recovered 1%. Allianz shares dipped 1.3% following a downgrade by Keefe, Bruyette & Woods. Hannover Rück and Munich Re also fell 0.9% and 0.4%, respectively. United Internet gained 1.1% following a positive Citi analysis.
Anglo American's Diamond Business on the Chopping BlockAnglo American might offload its diamond business, De Beers, for half its $4.9 billion valuation due to the weak diamond market. The stock price dropped 1% following news of the planned sales process launch.
Qualcomm Acquires Alphawave, WPP Plummets
Alphawave shares plunged by 18.9% in London following Qualcomm's decision to acquire the UK-based company for $2.4 billion (183 pence per share). WPP fell by 2.8% in light of CEO Mark Read's resignation, creating a leadership void. The downtrend remains intact, with the first resistance level around 600 pence.
Source: ntv.de, mau/DJ
- DAX
- Defense Industry
- Tariffs
Stock Market Policies Affect Business DecisionsThe EU's emphasis on its own deal in the ongoing trade talks might be indicative of a need for a specific employment policy related to trade negotiations. This suggests that community policy should consider the implications of trade agreements on employment and business development.
Financing and Investing in the Armament SectorThe consolidation in the armament sector indicates a shift in the financial landscape of the industry. Investors might need to reconsider their investing strategy in light of the potential longer consolidation phase, as the defense budgets might not offer immediate positive returns.
