European stock markets, software sector

02/16 European stock markets, software sector declines Vs. defense, financial strength close mixed amid differentiation

While stocks in the U.S. and China were closed, European stocks started higher due to backlash buying, but ended up with a mixed market in the late market. In particular, most software companies fell sharply, with software company SAP (-1.96%), falling due to AI penetration issues, while consumer goods companies in Gyeonggi Province such as L’Oreal (+3.41%) and financial stocks such as Banco Santander (+2.53%) and the defense industry are clearly differentiated. U.S. after-hours futures also digested for sale after an upward start, and Nasdaq turned downward and turned downward, mixed (-0.46% in Germany, +0.26% in the U.K., +0.06% in France, -0.11% in Eurostoxx 50)

*Variants: Munich Security Conference and Defense Industry, AI Choices and Software

As the relationship between the U.S. and the EU has rapidly cooled due to Trump’s push to annex Greenland, there is a sense of crisis that Europe can no longer rely on the U.S. for security. At the Munich Security Conference over the weekend, EU Commission President von der Leyen hinted at a deep change, saying, “The line that should not be crossed has already been passed,” and the German Chancellor also noted that distancing from the United States is accelerating. This, in turn, emphasizes the need to increase defense spending in European countries.

As a result, European countries are responding more aggressively by raising their defense spending to more than 3 percent of GDP, accelerating joint projects such as the development of long-range missiles (ELSA), and taking action. Germany has even started discussing its own European nuclear deterrent capability with France, highlighting the issue of nuclear development. This indicates that Trump is accelerating the global arms race, driving a sharp rise in aviation, space and defense sectors in the European stock market on Monday

Meanwhile, following a report that Honeymoon ended in late January, Deutsche Bank, which released a software debt risk report on the 9th, released a report titled “Fear of AI collapse has made the market a Sniper Street.” Deutsche Bank announced that the market has now entered the “Sniper’s Alley” section, which recognizes AI as a real threat that can break down certain industries, not just a driving force for growth. In the past, vague optimism about AI innovation was dominant, but now a differentiated market has begun to coolly weigh which companies will be replaced by AI or their profitability will deteriorate. This is reflected by the strong selling trend, especially in industries that are likely to be directly pressured by AI, such as software, logistics, and professional advisory services.

AI risk is now spreading beyond the technology sector to industries in the overall economy such as finance, real estate and asset management, fundamentally reorganizing the market’s valuation system, and why software companies have fallen sharply in the European stock market today. Many investors, including Deutsche Bank, recently reported that they should abandon their expectations that all companies will benefit from AI, and tell them to keep companies whose AI application effectiveness is proven by figures, but to boldly sell companies that do not. Software companies in European countries have fallen, with SAP (-1.96%) competing for the top market capitalization in Germany falling

*Featured Stocks: Software Slump Vs. Defense Industry, Financial Industry Strong

Software: Slumped by Deutsche Bank’s Report Aftermath
Daso Systems (-10.44 percent), a software developer for 3D-related products, has fallen sharply on Monday, with downward revision of its investment opinion concentrated on it, while it has been falling more than 30 percent since the beginning of the year. Still, concerns over AI-induced contraction of its business division, including Deutsche Bank’s report, are estimated to have contributed to the contraction of investor sentiment. Most software companies, including SAP (-1.96%), a corporate application software and services company, and Relx (-3.68%), an information analysis solution company, fell. Industrial automation and infrastructure operator Siemens (-6.41%) went on sale after a dividend and a recent downward revision of its guidance this year

Financial Stocks: Strong on expectations of shareholder return policy, including share buybacks
NETWEST (+4.76 percent) rose on news of a massive share buyback following UBS’s upward revision of its target share price. Barclays (+1.55%) has already topped 10 million shares as it accelerated the implementation of its share buyback program with RBC raising its target share price on Friday last week, and has also gained as the possibility of additional share incineration flows in. BNP Paribas (+1.56%) also rose as the share buyback program’s smooth progress was highlighted. Most financial companies such as Banco Santander (+2.53%) and Societe Generale (+2.91%) also rose as expectations for shareholder return policies such as treasury stock purchases rose.

Defense Industry: Rising on expectations to accelerate defense budget increases in European countries
British aerospace firm Melrose Industries (+3.89%) and defense firm Bobcock Inter (+3.62%) rose on the back of the British prime minister’s announcement of an accelerated increase in defense spending. The move came after the Munich meeting over the weekend, with Airbus (+2.45%), Thales (+3.42%) and Safran (+2.95%) also rising amid the acceleration of Dairy Countries’ defense budget increases. BAE Systems (+3.10%) also rose on the back of its defense policy meeting and its earnings release scheduled on Wednesday, highlighting the positive outlook.

Packaging, Construction: Down on concerns about sluggish business conditions
British paper packaging company Mondi (-4.27 percent) fell as concerns over a slump in business conditions were highlighted. Burrat Red Brow (-3.86%) fell as RBC Capital cut its target price and cited a calm outlook for the housing market. British builder Berkeley Group (-2.98%) also slumped

*Seoul Stock Exchange-Related Figures: Closed

The dollar/won exchange rate hit 1,444.90 won in Seoul on Friday. The overnight market closed at 1,444.60 won last Friday. The one-month NDF dollar/won exchange rate stood at 1,442.50 won.

*FICC: Gold Hits $5,000 After-Hours On Strong Dollar

International oil prices are rising as the U.S.-Iran deal tends to keep an eye on the U.S.-Iran deal. The move is believed to be due to geopolitical risks such as Iran’s military drills in the Strait of Hormuz to respond to the U.S. dispatch of aircraft carriers.