The German stock index DAX has reached an unprecedented peak.
The latest news regarding the US government's stance on Ukraine has sent shockwaves through various stock markets. The German DAX soared to a new all-time high, reaching 22,512 points, following a positive announcement from President Trump and Russian President Putin about starting negotiations to end the conflict in Ukraine. This hope for a swift resolution has boosted the sentiment in Europe, with the MDAX and EUROSTOXX also seeing gains.
However, the defense industry isn't sharing in the celebratory mood. Companies like Hensoldt and Rheinmetall saw a dip in their shares after the announcement, as investors grappled with the potential implications of a peace deal on defense spending and the US's role in Ukraine. On the other hand, Thyssenkrupp emerged as a notable exception, with its share price skyrocketing by 10.5% following a strong quarterly performance and large orders for its marine subsidiary.
Delivery Hero and Siemens also saw their stocks surge, with Delivery Hero's share price climbing by 6% thanks to strong results, and Siemens benefiting from the sale of its drive subsidiary Innomotics. The energy sector has also seen optimism, with oil prices dropping due to reduced likelihood of conflict-related energy disruptions and improved sentiment in energy-intensive sectors.
The euro has gained in value, while the dollar has dipped as investors flock towards less risky assets. The S&P 500 initially saw losses due to hotter-than-expected inflation data, but trimmed these by the end of the session. Global economic dynamics are undergoing a shift, with China attempting to play a part in peacekeeping efforts, further influencing market sentiment.
The defense sector, in particular, remains in a state of flux. The announcement has introduced significant uncertainty, leading to volatility in defense stocks. If a peace deal is reached, it could potentially increase defense spending by European nations or necessitate further spending to counter potential threats, benefiting defense companies. However, these companies also face ongoing uncertainty about future spending and geopolitical implications.
Despite the positive news about negotiations to end the conflict in Ukraine, defense companies like Hensoldt and Rheinmetall have seen a dip in their share prices due to potential implications of a peace deal on defense spending and the US's role in Ukraine. On the other hand, volatility in share prices continues in the defense sector, as the announcement has introduced significant uncertainty about future spending and geopolitical implications.