Rheinmetall's projected soar to EUR 2,000, as suggested by UBS
The DAX and Rheinmetall's Shares Soar to New Heights
Wednesday witnessed the DAX reaching a record-breaking high, with Rheinmetall's stocks also tapping an unprecedented level of 1,936 euros. This remarkable surge, amounting to a remarkable 212% year-to-date, saw Rheinmetall recording a 1.6% increase to 1,918.50 euros at midday, setting a course for the significant milestone of 2,000 euros.
Analysts at Swiss bank UBS, who have published a recent study, have raised their price target for Rheinmetall's stock from the previous 1,840 euros to an impressive 2,200 euros. Sven Weier of UBS attributes this escalation to the ongoing NATO discussions regarding the proposed 3.5% of GDP allocation for defense. Weier believes the current defense spending target has yet to be fully reflected in Rheinmetall's share price. Additionally, Weier is optimistic that Rheinmetall's robust financial health will enable it to extend assistance to unlisted defense suppliers experiencing financing difficulties.
However, the exuberant DAX marked a slight decline thereafter, demonstrating signs of being generally considered overbought. At midday on Thursday, it shed 0.2% to 24,186 points. In tandem, the Euro Stoxx 50, the Eurozone's blue-chip index, experienced a 0.4% drop to 5,397 points.
Aroundtown, a specialist in commercial real estate, experienced a 2.8% surge to 2.77 euros despite the announcement of a dividend shortfall in 2024. This growth was anticipated by market participants, who took it in stride after several previous years devoid of dividends. More recently, Standard & Poor's downgraded Aroundtown's rating.
The dollar showed minimal change on the foreign exchange market, with the dollar index rising by 0.1%. The euro strengthened ever so slightly by 0.1% to 1.1338 dollars.
Despite Japan's recent turbulence on the bond market, the yen demonstrated a slight recovery on Thursday, increasing by 0.1% to 144.15 per dollar. On the previous day, the yen had lost around 1%. Reports suggest that the Japanese finance ministry may alter plans for the issuance of ultra-long bonds due to the recent rise in yields.
Weak demand was observed in Wednesday's auction of Japanese government bonds with a 40-year maturity, with only bonds worth approximately 3.46 billion dollars sold. The bid-to-cover ratio dwindled to its lowest level since July last year, at 2.21, compared to the average of around 3 historically. These factors led to a record high yield of 3.675% on 40-year JGBs, while the yield on 10-year JGBs and 30-year bonds experienced minimal shifts.
The price of the benchmark oil grade Brent Crude climbed by 0.7% to $64.53 per barrel. Market participants pointed to a mix of countervailing factors influencing the oil market, including the renewal lapse of the export permit for oil produced by the multinational Chevron in Venezuela, potential new sanctions against Russia targeting the energy sector, and expectations of increased oil production by the OPEC+ cartel in July.
The surging shares of Rheinmetall, a significant player in the industry, are not confined to the DAX alone. Analysts at UBS, a Swiss bank, have predicted that Rhinmetall's stock could hit an even higher target of 2,200 euros, given the ongoing discussions in the finance sector about defense budgets and the potential impact on businesses like Rheinmetall.
