-- Germany's blue-chip DAX index closed Tuesday higher by 1.71%, as investors focused on the latest flurry of corporate earnings and trading updates against a backdrop of sustained conflict in the Middle East.
Rheinmetall (RHM.F) climbed to one of the top spots on the blue-chip DAX, closing 3.40% higher, as BofA Global Research looked past the German arms maker's preliminary first-quarter sales miss to focus on anticipated tailwinds from Germany's increased defense spending. Sales rose 7.7% year on year to 1.94 billion euros, falling short of the 2.27 billion-euro market forecast.
"This was driven largely by a difficult comp in 1Q25, but there is expected to be a strong growth acceleration in 2Q driven by Weapons and Ammo as the Murcia site commences full scale production and the delivery of already produced trucks to the German customer in 2Q... We maintain Buy on valuation. We continue to believe in the structural step up in German defence spending mid-term and see Rheinmetall as a key beneficiary of this inflection," the research firm wrote.
Conversely, Fresenius Medical Care (FME.F) was the worst performer, falling 10.68%, after reporting a continued contraction in US volumes in the first quarter. The German healthcare company's revenue slipped 6% annually to 4.61 billion euros but remained ahead of the 4.59 billion-euro consensus estimate.
Meanwhile, Commerzbank (CBK.F) noted that UniCredit's "unsolicited" takeover offer represents an 8.7% discount to the target's Monday closing price of 34.02 euros. The Italian banking group proposed 0.485 shares for each of the German lender's shares, valuing the target at 31.07 euros per share. Commerzbank said its board will review the proposal and issue a formal opinion within the statutory deadline. It gained 4.50% at the end of the session.
On the geopolitical front, tensions between the US and Iran escalated after Iran reportedly carried out an aerial strike on an oil port in the United Arab Emirates, while US forces said they sank six Iranian military boats in the Strait of Hormuz and escorted two merchant ships through the waterway.
"Energy markets remain volatile, with Brent crude prices at 113 USD [per barrel], reflecting persistent supply concerns. Mounting tensions are testing the fragile ceasefire, with risks to inflation becoming more pronounced," Danske Bank said.