- DAX retests historic peaks and maintains position as European growth leader
- PMI manufacturing data in Europe and the US in focus
- JPMorgan cuts recommendation for Kering and Swatch shares
The start of the week on the European stock market brings gains for most stock indexes. Germany’s DAX is currently adding 0.60% and retesting new historic highs, France’s CAC40 is rallying at the same time losing 0.39%, and the UK’s FTSE100 is adding 0.02%. Investor attention today focused on corporate news and PMI manufacturing data.
Sentiment in the European stock market is very good today. The only sector doing slightly worse is the semiconductor sector. Source: xStation5
Volatility seen on individual German companies today. Source: Bloomberg Finance L.P.
DE40 (D1 interval)
The DAX broke above the 50-day exponential moving average (blue curve on the chart) a few days ago and tested another important resistance point, which was the local top of the session consolidation zone from the beginning of the second half of November. From a technical point of view, the DE40 appears to maintain its overall uptrend until the 100-day curve (purple curve) is broken on high volume, so it is worth looking now to see if the index manages to stay above this zone permanently. If such a scenario were to take place, it could mean an increase in the chances of a general continuation of the upward trend and thus the breakout of new historical highs, which are being retested today.
Source: xStation5
News
JPMorgan downgraded its recommendation on Kering (KER.FR) and Swatch (UHR.CH) to underweight from its previous rating of neutral. The bank says 2025 is unlikely to be a breakout year for the suppressed luxury brands. The bank expects continued weak sales and profit growth in the industry more broadly, due to the Chinese economy. Analysts still see no real evidence of improvement in Gucci’s brand positioning, predicting another year of profit declines and pressure on the balance sheet. For Swatch, JPM continues to see very strong pressure on watches, especially in the mid-segment, which is “a key point for Swatch. ”The company has unfavorable exposure for 2025, including geographic mix (high exposure to China versus less reliance on Americans).
Dassault Aviation’s (AM.FR) supply constraints “mask” the real value offered by the French aircraft manufacturer, Citi says in a note establishing analyst coverage with a buy recommendation. The bank’s analyst writes that deliveries of Rafale fighters and Falcon business jets should increase markedly over the next few years. Rafale has a multi-year backlog of orders and there is potential support from further large orders, particularly from India and the Middle East. Target price set at 230 euros, up 22% from Friday’s close.
Investment bank recommendations:
- Hermes (RMS.FR) upgraded to buy at HSBC; PT €2,500
- LVMH (MC.FR) upgraded to buy at HSBC; PT €727
- Novo Nordisk (NOVOB.DK) upgraded to overweight at BNPP Exane; PT 930 kroner
- Kering (KER.FR) downgraded to underweight at JPMorgan; PT 195 euros
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