Blue-chip DAX Index Rises; German Private Sector Contraction Slows
German shares ended the last trading day of the week in the green, as the market assessed the latest private sector data.At Friday's close, the blue-chip DAX index was up 0.78%.Business survey data compiled by S&P Global showed an easing contraction in Germany's private sector, with manufacturing gains overshadowed by a persistent, albeit moderating, downturn in service sector activity. The final S&P Global Germany Composite PMI Output Index stood at 49.5 in June, up from the previous 48.8 and the flash estimate of 48."Encouragingly, cost pressures subsided considerably across the service sector in June, helped by the reduced price of fuel. However, the dynamics for the coming months are somewhat unclear, as whilst global oil prices have fallen closer to pre-conflict levels, the temporary fuel tax cut has now ended and developments in the Middle East remain unpredictable," S&P Global Market Intelligence economics associate director Phil Smith said.Zooming out, the final seasonally adjusted S&P Global Eurozone Composite PMI Output Index hit a three-month high of 50 in June, against the 48.5 previously and the flash estimate of 49.5, marking the index's return to expansion territory. The euro area's private sector stabilized for the month, as an expansion in manufacturing output offset a slowing decline in services activity.In corporate updates, Deutsche Bank Research cut its price target for Rheinmetall's (RHM.F) buy-rated stock to 1,800 euros from 2,100 euros ahead of the German arms maker's second-quarter earnings report on Aug. 6."After the [Federal Ministry of Defence] scrapped the F126 program, the focus of the quarter will no longer be on reaching the EUR20bn order indication the company had initially given but clearly on delivering the guided Q2 top-line growth. In an ad hoc release before the pre-close call, the company confirmed the Q2-26 top-line message, which is a positive and in line with our thinking. On the other hand, unsurprisingly, the company points to a shortfall versus the EUR20bn order intake guide. Furthermore, Rheinmetall quantified the F126 financial fallout with a surprising FY26 impact," the research firm wrote, noting it maintained a "positive view" on the stock. Rheinmetall lost 1.94% at the end of the session.Fellow defense company Renk Group (R3NK.F) fell 0.98% after agreeing to buy UK-based high-precision gearbox manufacturer David Brown Defence through a purchase of shares in DB Defence Holdco. The military and civilian propulsion systems maker expects the deal will bolster its naval defense business.
