DE40: Defence industry under pressure, market waiting for FED

10:01 19 August 2025

The European session opens with expectations regarding the results of peace meetings and the publication of the FED minutes. The market reaction is moderate.

DE40: -0.17%
FRA40: +0.36%
UK100: -0.14%
EU50: +0.13%

There are no significant company results or macroeconomic data in the European market, so investors are waiting for the next impulse, primarily from the FED. This Wednesday, the so-called FOMC Minutes will be published, which will show the record of discussions during the last meeting. The Minutes may reveal, to a greater extent than the statement, what other members, besides Jerome Powell, think about the prospects for interest rates. Of course, from the Fed's perspective, the more important event will be Friday's economic symposium in Jackson Hole, where the main event will be speeches by Powell and other Fed members.

Leaders of selected European countries and NATO met yesterday with Donald Trump to continue peace negotiations. The USA declares its willingness to provide guarantees after the end of the war, while EU/NATO leaders are advocating for further sanctions.

Currently, the EU economy and market are under pressure from US tariffs, competition from China, threats from Russia, and internal problems, including low growth and debt. Considering valuations, at the moment, investors seem to believe that the European community will overcome most of these issues, but the question remains whether these hopes will prove justified.

DE40 (D1) 

The German index is currently in the middle of a consolidation channel, in an upward trend. The market defended the trend line at the EMA100 average, which serves as strong support in case of declines. The next resistance to overcome on the index is the all-time high from last month at the level of 24757.

Company news:

Hope for the end of the war is sinking defense company stocks - The possibility of ending hostilities and reducing the demand for weapons and ammunition negatively impacts the stocks of European defense industry giants. Rheinmetall (RHM.DE) is down over 3%. Dassault (AM.FR) is losing over 2%. BAE (BA.UK) is also down over 2%.

Stratec (SBS.DE) - The medical-diagnostic company published its report for the first half of 2025, which the market received very positively. Sales are increasing, and the margin remains stable, resulting in a gap-up opening, and currently, the price increase is over 3%.

Merck KGaA (MKR.DE) - Another investment bank has downgraded the rating for the biotechnology company's stock. Valuations are reacting with a decline of about 1%

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