Defense sector in turbulence: down 16% in one month despite a volatile geopolitical context
Safran and Airbus Lead the Sector into a Downward Spiral
The two heavyweights in the sector account for most of the damage. SAFRAN, the panel's top capitalization at nearly 118 billion euros, has plummeted 18.89% over a month and continues to drop by another 3.96% this Friday, with an RSI falling to 21 — deeply in the oversold zone. AIRBUS shows a similar RSI (20) and is down 14% over the period. DASSAULT AVIATION and Thales manage to limit the damage to around -6.5% to -8% over the period, but they too are significantly down today (-4.29% and -2.73% respectively).
The entire Parisian market is under pressure as the week ends: the CAC 40 closed down 1.82% and the SBF 120 by 1.80%, in a highly tense environment illustrated by a VIX increase to 25.09, over 12% in two days. The military escalation in the Middle East, with soaring Brent prices and the paralysis of regional air traffic, is fueling risk aversion and hitting the aerospace-defense giants hard, as they face supply chain disruptions and rising energy costs.
Only a few niche stocks are withstanding the pressure: EXAIL TECHNOLOGIES (RSI at 64), EXOSENS, and Explosifs et Produits Chimiques (EPC) manage to stay above their long-term moving averages.
Widespread Overselling: A Signal for a Technical Rebound or Continuation of the Correction?
The sectorial technical chart suggests caution. The sector's weighted RSI stands at 27.8, indicating a pronounced oversold area—a level that historically might precede a technical rebound. However, the underlying signals remain unfavorable: the weighted average price is significantly below its 50 and 200-day moving averages, reflecting a bearish momentum in the medium to long term.
The outlook has no shortage of potential catalysts—such as the « France Libre » aircraft carrier program, valued at 10 billion euros and involving more than 600 subcontractors—but the geopolitical stress and high market volatility continue to exert downward pressure on large-cap stocks. The current correction far exceeds that of the market, which could suggest that the sector has undergone profit-taking following a previous period of outperformance.
For now, the technical dynamics favor continued consolidation over an immediate reversal.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
