Rheinmetall Stock Drops After Poland Cancels Munitions Contract

In his speech at Jackson Hole, Fed Chairman Jerome Powell once again hinted at an upcoming interest rate change. A munitions contract that had been signed with the Polish government in 2022 but was canceled last year caused the Rheinmetall stock to decline.

Optimism seems to have returned to the stock markets in both the United States and Germany. The DAX improved by 1.70% over the week, closing at 18,628 points. The MDAX ended the week with a gain of 1.45%, closing at 25,171 points, while the SDAX rose by 0.59% to 13,940 points.

Across the Atlantic, market sentiment was also positive, with the Dow Jones gaining 1.27% over the week to reach 41,186 points. The tech-heavy Nasdaq 100 rose by 1.05% to 19,714 points.

Fed Chair Powell Signals Rate Cut in September

The focus of investor interest last week was the central bank symposium in Jackson Hole, Wyoming, particularly the speech by Fed Chair Jerome Powell. In July, the U.S. Federal Reserve decided to maintain the key interest rate in the range of 5.25% to 5.50%. At the same time, the Fed indicated a possible first rate cut after the inflation surge in September, while stressing that monetary policy would remain dependent on economic developments.

At the meeting of central bankers, Powell confirmed that a rate change is imminent. He welcomed the decline in inflation in recent months and expressed confidence that inflation is on a sustainable path back to 2%. He stated that it is time to adjust monetary policy, although he did not provide a specific timeline or details on the magnitude of the rate changes. Following his speech, stock indices in the U.S. and Germany turned positive.

Rheinmetall Loses Contract with Poland

Last year, the Polish government canceled a munitions contract that had been signed in 2022 with the German defense company Rheinmetall. This was reported by various media outlets, citing the Polish newspaper Rzeczpospolita. Rheinmetall Denel Munition, a joint venture between Rheinmetall and the South African company Denel, was supposed to deliver artillery shells to the Polish military. However, the delivery was blocked by the South African government, which feared the shells might end up in Ukraine.

There is currently no information on the contract’s value, and the Polish Armaments Agency, which is under the Ministry of Defense, declined to comment, citing confidentiality clauses. Rheinmetall has also not yet commented on the matter.

The Rheinmetall stock took a hit due to this news, losing 5.90% over the week. However, on a yearly basis, the stock is still up by a strong 116%, and over the past three years, it has gained more than 580%.

In contrast, the trading week was more favorable for the concert promoter and ticketing company CTS EVENTIM. After the release of its quarterly figures, the stock climbed to a new record high.

Outlook

Next week, the cybersecurity specialist CrowdStrike will report its figures for the past quarter. In July, the company caused widespread computer issues and system outages with an update, which sent its stock price plummeting, and it has yet to recover. Additionally, SAP competitor Salesforce will also release its financial results.