European financial markets are relatively optimistic today, although this is largely due to a thaw following Friday's significant declines. Nevertheless, the DE40 is gaining 1.2% today and approaching its 50-day EMA. Banks, especially British ones, are performing relatively well today, while companies related to the watch and chocolate sectors are losing ground in response to higher tariffs in Switzerland.
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Volatility is currently being observed in the broader European market. Source: xStation
The German DE40 index is gaining 1.2% today and defending the support zone defined by the 100-day exponential moving average (purple line on the chart). As long as the DE40 remains above these zones, the overall longer-term upward trend remains sustainable. However, a key factor in this comeback could be a break above the 50-day EMA (blue line), which, when broken earlier, has somewhat undermined the medium-term upward trend. Source: xStation
Market Background
The Swiss stock market is resuming trading after the bank holiday. Despite broad-market euphoria in Europe, Swiss stocks are performing significantly worse due to a delayed reaction to the US imposing 39% tariffs on goods from that country. This is why watchmaking stocks, including Swatch (UHR.CH) and Cie Financiere Richemont (CFR.CH), are under pressure. Chocolate producers such as Lindt (LISN.CH) and Barry Callebaut (BARN.CH), are also performing poorly.
Source: xStation
Shares of British banks/lenders, including Lloyds Banking Group Plc (LLOY.UK) and Barclays Plc (BARC.UK), surged after the UK Supreme Court overturned most of a lower court ruling, with high court judges ruling that banks should only pay compensation in the most serious cases of mis-selling car loans, according to the ruling.
Puma SE's (PUM.DE) new CEO, Arthur Hoeld, says the brand is perceived as "cheap" and needs a trend reversal to return to profitability and growth and face rapidly growing competition. Analysts at RBC Capital say Puma's situation is "quite risky," and Hoeld's implementation of a turnaround plan will be crucial to stem the crisis and convince retailers to buy again.
Recommendation upgrade:
- Air France-KLM (AF.FR) shares raised to "equal-weight" at Barclays
BAE (BAE.UK) shares raised to "buy" at Jefferies; 2,060 pence target price
Hensoldt (HAG.DE) shares raised to "hold" at Jefferies; €92 target price
IAG (IAG.UK) shares raised to "equal-weight" at Barclays; 370 pence target price
Lufthansa (LHA.DE) shares raised to "equal-weight" at Barclays; €7.20 target price
Recommendation upgrade:
- Shell (SHELL.NL) downgraded to "hold" at HSBC; 2,950 pence target price
News from companies listed on the German stock exchange. Source: Bloomberg Financial Lp
