DE40: European Markets Advance, Rheinmetall Surges

• European equities trade mostly higher, with AUT20 (+1.08%) and ITA40 (+0.94%) leading gains, while VSTOXX (-0.58%) indicates improving risk sentiment

• Rheinmetall (RHM.DE) Shares Surge 7% on European Defense Spending Prospects - Stock hits two-year high after CEO meets with Ukrainian President to discuss ammunition production expansion; shares supported by potential new EU defense package

• Commerzbank (CBK.DE) Gains on Visa Partnership and Analyst Upgrade - Oddo BHF raises price target to €22.5 from €18.5 on strong outlook and new strategic card payment initiative starting 2026

General market situation: European markets are displaying bullish sentiment, with a majority of indices trading in positive territory. The AUT20 leads gains (+1.08%), followed by ITA40 (+0.94%) and W20 (+0.85%). The NED25 (+0.50%) and DE40 (+0.39%) also show notable positive movement. The UK100 (+0.35%), EU50 (+0.28%), and SPA35 (+0.24%) maintain moderate gains. However, some indices are declining, with both SUI20 and FRA40 show marginal decreases (-0.03%).

Dax Returns by Sector. Source: Bloomberg Financial LP

Volatility is currently observed in the broader European market. Source: xStation

The German DE40 Index is trading at its all-time high (ATH). Bulls will aim to stay above the previous high at 22,000, while bears may target a retest of the 78.6% Fibonacci retracement level which coincides with the 30-day SMAl. In the event of a more significant correction, the 61.8% Fibonacci retracement level, which coincides with the 50-day SMA, could come into play. The RSI is showing signs of losing upwards momentum in the overbought zone, which could signal caution. Meanwhile, the MACD is still favoring bulls. Source: xStation

News

• Rheinmetall (RHM.DE) Shares Surge on European Defense Spending Prospects - The German defense manufacturer's stock jumped up to 11% in Frankfurt trading, marking its largest gain in over two years. The surge comes amid discussions of a major new European defense spending package, with shares having more than doubled over the past year. CEO Armin Papperger met with Ukrainian President Volodymyr Zelenskiy to discuss expanding operations in Ukraine, particularly regarding 155-mm ammunition production. The potential European defense initiative, expected to be announced after Germany's February 23 election, could accelerate Rheinmetall's production capacity expansion plans.

• Commerzbank (CBK.DE) Expands Visa Partnership, Receives Analyst Upgrade - The German bank has entered a long-term strategic partnership with Visa to enhance its card payment offerings, with plans to issue Visa debit and credit cards starting 2026. Simultaneously, Oddo BHF raised its target price from €18.5 to €22.5, maintaining an 'outperform' rating. The upgrade reflects strong operating performance and positive medium-term outlook, with analysts projecting ROE exceeding 11% in 2026 and an average total return of approximately 15% over 2025-26. The bank's shares currently trade at 0.8 times 2024 book value.

• German Election Race Intensifies One Week Before Vote - Latest polls show CDU leading at 30%, followed by AfD at 20%, SPD at 15%, and Greens at 13%. The second TV debate featuring candidates Olaf Scholz (SPD), Friedrich Merz (CDU), Alice Weidel (AfD), and Robert Habeck (Greens) covered key issues including immigration, economy, and defense spending. An Ifo institute study revealed significant funding gaps in CDU (€96.7bn) and AfD (€154.6bn) programs compared to nearly fully funded plans from SPD and Greens. With over a quarter of voters still undecided, the election outcome could result in complicated coalition negotiations, potentially impacting Germany's fiscal policy and competitiveness.

Other news coming from individual DAX index companies. Source: Bloomberg Financial LP