- European equities trend mostly higher, with FRA40 (+0.54%) and W20 (+0.38%) leading gains, while SUI20 (-0.14%) and SPA35 (-0.08%) lag; VSTOXX flat at 17.73 points suggesting stable market sentiment
- Dodge & Cox Building Position in Bayer
- Jefferies Downgrades Airbus on Operational Concerns
- German Election Risk Premium Remains Low
European markets are showing mixed performance, with a slight tilt toward positive territory. The SUI20 is leading the declines (-0.14%), followed by SPA35 (-0.08%) and DE40 (-0.05%). The VSTOXX remains flat (0.00%), while several indices are showing gains, including the EU50 (+0.06%), UK100 (+0.08%), NED25 (+0.13%), ITA40 (+0.14%), AUT20 (+0.37%), W20 (+0.38%), and FRA40 (+0.54%) displaying positive momentum.
Dax Returns by Sector. Source: Bloomberg Financial LP
Volatility is currently observed in the broader European market. Source: xStation
The German DE40 Index is trading below its all-time high (ATH). Bulls will aim to stay above the previous high at 22,000, while bears may target a retest of the 78.6% Fibonacci retracement level, with a further target at the 30-day SMA at 21,732. In the event of a more significant correction, the 61.8% Fibonacci retracement level, which coincides with the 50-day SMA, could come into play. The RSI is showing signs of bearish divergence, signaling caution. Meanwhile, the MACD recently gave a sell signal. Source: xStation
News
- Dodge & Cox Increases Stake in Bayer – The investment firm now holds 3.03% of total voting rights in Bayer AG, according to a February 21 filing. The threshold was crossed on February 13 through acquisition of shares with voting rights. Trading activity data shows Morgan Stanley, JP Morgan Chase Bank, and Merrill Lynch as the most active brokers in Bayer from January 21 to February 20, with the stock rising 1.6% over the past month at an average share price of 21.28 euros.
- Jefferies Downgrades Airbus on Integration Challenges – The investment bank has reduced its recommendation on Airbus from buy to hold, citing concerns over ramp-up challenges and aerostructures business integration. Analyst Chloe Lemarie notes the absence of a buyback announcement as a potential headwind for share performance. Jefferies cut its price target by 5% to €180, reflecting expectations of slower EBIT growth in commercial aviation and weaker defense and space performance. The downgrade follows Airbus’s recent quarterly results, where earnings fell short of estimates while sales exceeded expectations.
- Markets Show Limited Hedging Against German Election Risks – Current market positioning suggests confidence in polls predicting a mainstream coalition outcome, potentially underpricing upset risks. EUR/USD one-week volatility stands at 7.74%, below the five-year average and implying only a 0.9% potential decline. The Swiss franc has seen modest demand despite its haven status. The DAX Index has gained approximately 12% this year, buoyed by expectations that any resulting coalition would have sufficient majority to reform the debt brake, which requires a two-thirds Bundestag majority to modify. Recent polling shows public support for loosening or eliminating this borrowing limit, though an unexpected election outcome could challenge these assumptions and pressure the euro.
Other news coming from individual DAX index companies. Source: Bloomberg Financial LP
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