Safran and Airbus drag down the sector into a downward spiral
The two heavyweights in the sector account for the majority of the damage. SAFRAN, the top capitalization in the panel with over 118 billion euros, falls by 18.89% in a month and drops another 3.96% this Friday, with an RSI falling to 21 – deeply in oversold territory. AIRBUS shows a similar RSI (20) and declines by 14% over the period. DASSAULT AVIATION and Thales limit the damage around -6.5% to -8% over the period, but also decline significantly today (-4.29% and -2.73% respectively).
The entire Paris market is under pressure at the end of the 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, up by more than 12% in two days. The military escalation in the Middle East, with the surge in Brent oil prices and the paralysis of regional air traffic, fuels risk aversion and hits the aerospace-defense giants hard, exposed to disruptions in logistics 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 moving averages.
Oversold conditions: signal of a technical rebound or continuation of the correction?
The sector’s technical picture calls for caution. The sector’s weighted RSI stands at 27.8, in a heavily oversold zone – a level that historically precedes a technical rebound. However, the underlying signals remain degraded: the weighted average price is significantly below its 50 and 200-day moving averages, reflecting a downward momentum in the medium and long term.
The outlook offers no shortage of potential catalysts – including the “France Libre” aircraft carrier program worth 10 billion euros involving more than 600 subcontractors – but the geopolitical stress and high volatility in the markets maintain selling pressure on large capitalizations. The current correction far exceeds that of the market, indicating that the sector may have 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 turnaround.
