Monday's session on European markets brings mixed investor sentiment, despite better sentiment on Wall Street (in terms of futures). The main topic of today's session is the conclusion of a preliminary trade agreement between the US and the European Union on trade tariffs. The agreement, although still a framework agreement and requiring many details to be worked out, contains several key elements: A 15% tariff cap on EU goods imported into the United States, which will be introduced permanently. A commitment by the EU to purchase $750 billion worth of US energy, which will reduce dependence on supplies from Russia. An additional $600 billion in EU investment in the US economy. The plans to invest in the US have a significant impact on several European sectors, including the military industry, which may lose future contracts to American competitors.
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Current volatility in the broader European market. Source: xStation
The German DE40 index is down 0.25% in today's session, although it remains above the support zones set by the 50-day exponential moving average (blue curve on the chart) and the average set by Bollinger Bands on a 12-day price history with twice the standard deviation as the lower and upper auxiliary curves. As long as DE40 remains above these zones, the overall upward trend remains stable. Source: xStation
Market news
European semiconductor companies are seeing gains after the conclusion of a trade agreement between the EU and the US. After the weekend, when President Trump and European Commission President Ursula von der Leyen announced an agreement on a 15% tariff on EU goods entering the US, shares in companies such as ASML and ASM International rose by 4.4% and 3.4% respectively. Shares in BE Semiconductor, STMicroelectronics, Apple, and Tesla also rose, while Infineon shares went up 2.2%.
Today's rates of return on shares of companies in the semiconductor manufacturing sector and key semiconductor manufacturing equipment. Source: xStation
The new US-EU trade agreement has set the tariff on cars from the EU at 15% instead of the previous 27.5%, which means a total profit increase of around €4 billion for BMW, Mercedes and other European manufacturers, and an improvement in margins of 50 bp for BMW and 30 bp for Mercedes, particularly thanks to the production of SUVs in the US. In addition, BMW and Mercedes will benefit from the elimination of tariffs on approximately 185,000 cars exported from the US to the EU.
The German Air Force (Luftwaffe) has issued a request for proposals to leading German defense manufacturers and startups for the development of drones capable of precision bombing, Handelsblatt reports, although the source of the information has not been disclosed. The Bundeswehr plans to develop this capability by 2029, which is expected to strengthen the country's defense potential. On the other hand, however, shares in this sector are losing value because the European Union's commitment to substantial investments in the US may reduce capital expenditure directed at the European arms industry in favor of American competitors.
Source: xStation
Current results of the largest companies listed on the German stock exchange. Source: Bloomberg Financial Lp
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