DE40: European stocks reverse early gains

The second phase of Monday's session on European markets brings a deterioration in investor sentiment. Despite early gains, futures based on major indices are losing value. The German DE40 is currently down 0.4%, while the EU50 is down 0.33%. The defense industry is performing poorly today, while pharmaceuticals are rebounding on the wave of favorable corporate news. No macro data of significant market importance is scheduled for release during today's session. For this reason, investors will focus on corporate news and incoming geopolitical commentary.

Source: xStation

Current volatility observed on the broader European market. Source: xStation

The German DE40 index is down 0.50% in today's session and is testing the support zones set by the Bollinger Band moving average representing the dynamics of movements over the last 12 sessions. As long as the DE40 remains above these zones and the 50-day EMA barrier (blue curve on the chart), the overall long-term upward trend remains sustainable. The most important resistance level currently remains the range of recent historical highs. After a possible break below the aforementioned support levels, the control point on the chart may be the low from August 1, when we observed increased market volatility. Source: xStation

Market information

• European Central Bank officials intend to wait until December for the next interest rate cut, which is likely to be the last step in the current monetary policy cycle. Securities analysts are also shifting their forecasts for a possible rate cut. Postponing the decision until the end of the year gives ECB policymakers more time to assess the impact of trade disruptions resulting from the US administration's actions and new tariffs. This will allow them to analyze the economic situation after the third quarter more accurately and better estimate the directions of growth and inflation in the coming months.
• Shares in German company Rheinmetall (RHM.DE) fell by more than 4% on Monday morning on the Frankfurt Stock Exchange. The decline is due to investor concerns about the possible end of the conflict in Ukraine and talks between Trump and Putin, which could result in cuts to public spending on the arms sector.
• Danish energy company Ørsted (ORSTED.DK) announced on Monday that it was suspending the partial sale of the Sunrise offshore wind farm project in New York. Instead, the company plans to raise DKK 60 billion (approximately USD 8 billion) through a share issue. Ørsted explained that due to significant adverse changes in the US offshore wind energy market, it is no longer possible to complete the originally planned sale of shares and the related financial structure of the project on favorable terms.
• Shares in pharmaceutical company Novartis (NOVN.CH) are up more than 3% today after the company announced that both Phase III clinical trials of ianalumab have met their primary endpoints.
• GSK (GSK.UK) shares rose 0.8% after the US Food and Drug Administration (FDA) granted priority review to gepotidacin, the company's next-generation antibiotic used to treat uncomplicated gonorrhea. Potential approval would provide an effective oral treatment for a serious infection that is showing increasing resistance to currently available antibiotics. A regulatory decision is expected in December.
• Marks & Spencer (MKS.UK) shares are up 2.4% today after the company resumed accepting orders for clothing through its "click and collect" system following a nearly four-month hiatus caused by a cyberattack and data theft.

News from companies listed on the German stock exchange. Source: Bloomberg Financial Lp