European indices are performing mixed at the start of the second phase of Monday’s trading session. Germany’s DAX is up 0.29%, while France’s CAC40 is down 0.19% and the UK’s FTSE100 is down 0.17%. Once again, defence companies are leading the way in today’s session, this time driven by the dispute over Greenland.
European investors are still maintaining a risk-on sentiment ahead of US inflation data and the start of the earnings season, as evidenced by the heavily overbought Stoxx 600 index and Europe’s relative advantage over the S&P 500 since the beginning of the year. Investment bank strategists suggest a “rotate, not retreat” approach for Q1 – increasing exposure to value-cyclicals (banks, real estate, materials, industry, small and medium-sized companies) while maintaining, but not increasing, positions in the “Magnificent 7”. Geopolitical tensions and Trump’s pressure on the Fed are currently boosting defensive stocks rather than spoiling the overall market picture. However, it is worth bearing in mind that, measured by momentum indicators, the recent upward movements on indices, including the German DE40, are creating the basis for possible downward corrections.
Current quotations for major contracts. Source: xStation
Current volatility observed on the broader European market. Source: xStation
During Monday’s trading session, the DAX continued its upward trend and broke through the previously mentioned barrier of 24,780 points, which was the main resistance level in 2025. What is more, the current bullish momentum, which managed to break the contract above the 50-day exponential moving average (blue curve on the chart) and the 100-day exponential moving average (purple curve), is, from a technical perspective, an indication of a short-term upward trend in the instrument. As long as DE40 remains above these support barriers, the current trend is likely to continue. Source: xStation
Key corporate news:
European military companies are gaining value today as investors anticipate rising defence spending amid tensions in the Arctic. A group of European countries, led by Germany and the United Kingdom, is considering increasing its military presence in Greenland to respond to US threats to take over the territory and to emphasise the importance of Arctic security.
Source: xStation
Abivax (ABVX.FR), a French biotech company, rose 25% following reports that pharmaceutical giant Eli Lilly is preparing a takeover bid of around €15–17.5 billion ($17–20 billion). The company’s key asset is obefazimod (ABX464), which has shown promising results in late-stage clinical trials for the treatment of colitis – in July 2025, shares rose by as much as 510% in a single day after the announcement of positive data, which attracted the attention of big pharma. Eli Lilly has not yet made a formal offer, but is awaiting guidance from French authorities on foreign investment controls. However, speculation alone about the interest of such a powerful player looking for acquisitions in immunology is sending shares higher as the market speculates on the valuation and likelihood of a deal.
Activities of investment bank analysts:
INCREASES:
- Carlsberg upgraded to “above average” by BNP Paribas; target price 1,000 Danish kroner.
- L’Oreal upgraded to “hold” by Deutsche Bank; target price €360
DISCOUNTS:
- Barry Callebaut downgraded to “sell” by Deutsche Bank
- Danone downgraded to “sell” by Deutsche Bank; PT €67
- Heineken downgraded to “neutral” by BNP Paribas; PT €73
- Holcim downgraded to “neutral” by BofA
- Pandora downgraded to “hold” by Nordea.
- Pernod Ricard downgraded to “underperform” by BNP Paribas; target price €67.
- Sartorius Stedim downgraded to neutral by Goldman; target price €246.
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