At the start of the week, the Dax index had a significant decline. By the end of the Xetra trading session, the index was calculated at 22,798.09 points, a gain of 1.26% compared to the previous trading day. The index had even reached a new all-time high of 22,804.20 points at one point.
“Today, the aftermath of the Munich Security Conference was particularly noticeable at Rheinmetall. The stock’s short squeeze pushed the Dax almost single-handedly to a new all-time high” commented market analyst Konstantin Oldenburger of CMC Markets on the developments. “With the day’s, once again, two-digit gain, the defense company has increased in value by almost a third on the stock exchange since last Wednesday.”
Oldenburger further stated, “The US wants to negotiate an end to the war with Russia and Ukraine alone and then leave the Europeans with a potential peacekeeping mission, which not only requires a significant increase in their defense budgets. That the Americans are willing to let their military support for the region expire, as has been the case since Trump’s election, is no new insight.” However, the appearance of Vice President Vance in Munich made it clear once again, “that Europe must invest a lot to be taken seriously again by the US in terms of defense capability.”
“The two percent target for defense spending may only be a intermediate step in the buildup and the expenditure dynamics in this sector will remain high” conceded the market observer. “However, investors should also view the extreme price increase for Rheinmetall with skepticism, as the company will eventually be measured by its quarterly results and not by the country’s spending.” It is not certain who will receive the additional funds and the price increase of Rheinmetall’s stock has been going on for several years and “has already largely anticipated such plans” warned the expert.
At the top of the Dax price list, the values of Rheinmetall were able to record a gain of more than 14% in the short term, with Siemens Energy behind it, bringing a gain of more than three percent and Munich Re with a gain of more than two percent. In contrast to the trend, the shares of Vonovia, Sartorius and Symrise were found at the bottom of the list, with losses of over one percent.
The European common currency was slightly weaker in the afternoon: one euro cost 1.0483 US dollars and one dollar was worth 0.9539 euros.
The gold price was able to profit, with an afternoon price of 2,898 US dollars per fine ounce (+0.5%), equivalent to a price of 88.87 euros per gram.
The oil price, on the other hand, rose, with a barrel of the North Sea variety Brent costing 75.03 US dollars at 5 pm German time, a gain of 29 cents or 0.4% compared to the end of the previous trading day.