Safran and Airbus Dragging the Sector into a Downtrend
The two heavyweights of the sector account for the majority of the losses. SAFRAN, the top market capitalization in the panel with over 118 billion euros, drops by 18.89% in a month and further declines by 3.96% this Friday, with an RSI falling to 21 – deeply in oversold territory. AIRBUS shows a similar RSI (20) and falls by 14% over the period. DASSAULT AVIATION and Thales limit the damage around -6.5% to -8% over the period, but also see significant declines today (-4.29% and -2.73% respectively).
The entire Paris market is under pressure this week: the CAC 40 closes down by 1.82% and the SBF 120 by 1.80%, in a climate of high tension illustrated by a VIX at 25.09, rising by over 12% in two days. The military escalation in the Middle East, with the surge in Brent prices and the paralysis of regional air traffic, fuels risk aversion and hits the aero-defense giants hard, exposed to disruptions in supply chains and rising energy costs.
Only a few niche values resist: EXAIL TECHNOLOGIES (RSI at 64), EXOSENS, or Explosifs et Produits Chimiques (EPC) manage to stay above their long-term moving averages.
Oversold Conditions: Signal of Technical Rebound or Continuation of Correction?
The sector’s technical picture calls for caution. The sector’s weighted average RSI stands at 27.8, in a marked oversold zone – a level that historically can precede a technical rebound. However, the underlying signals remain degraded: the weighted average price is significantly below its 50 and 200-day moving averages, indicating a downward momentum in the medium and long term.
The outlook offers various potential catalysts – including the “Free France” aircraft carrier program of 10 billion euros involving over 600 subcontractors – but the context of geopolitical stress and high market volatility maintains selling pressure on the large capitalizations. The current correction far exceeds that of the market, which could indicate that the sector has been subject to profit-taking after a previous outperformance phase.
For now, the technical balance of power leans more towards a continuation of consolidation than an immediate reversal.
