Stocks associated with defense sector experience steep declines, causing Dax to dip below the 24,000 threshold.
Market Recap: June 25
Today, both the Dax and MDAX indices took a hit, with the Dax closing at 23,988 points, down by 0.77%, and the MDAX ending at 30,549 points, down by 1.05%.
📈 Dax Chart:
📈 MDAX Chart:
Kontron Gains on Large Order from Czech Railways
Shares of Kontron, a tech giant, saw a boost on Tuesday, thanks to a hefty order from the Czech Railways. The company's stock skyrocketed by around 5%, making it the top performer in the SDax index of smaller German stocks. This surge saw Kontron's shares reach their highest level since late March, breaking out of their recent slump. However, they're still some distance away from their record high of 26.16 euros in mid-March.
📈 Kontron Chart:
Defense Stocks Take a Beating
It was a rough day for German defense companies, with Renk, the MDAX laggard, experiencing a sharp decline of 11.7%. The selling off was sparked by Bank of America downgrading the stock to "Underperform" and withdrawing its buy recommendation. Analysts cited Renk's recent run and a lack of activity in the defense electronics sector as reasons for the downgrade.
Hensoldt shareholders also took a hit, with shares declining by 6.1%, while Rheinmetall's shares dropped by roughly 5.8%. Just a few days ago, all three defense stocks had hit new record highs, but they've since taken a nosedive.
📈 RENK Group Chart:
Despite the market turmoil, Kontron continues to shine, riding the wave of a potentially game-changing order. As for the defense stocks, the road to recovery may be long, but it's clear that the industry is bracing for some turbulence.
In the context of the market recap for June 25, the banking and insurance sector may find potential opportunities for investment given Kontron's positive performance, as it gained significantly on a large order from Czech Railways, outperforming the SDax index. On the other hand, the finance sector might want to reconsider investments in defense stocks due to their recent downward trend, with companies like Renk, Hensoldt, and Rheinmetall experiencing substantial losses following a downgrade from Bank of America.
