The renewed attacks in the Iran conflict have abruptly dampened confidence in a swift diplomatic de-escalation. Following the preliminary suspension of US attacks, geopolitical uncertainty is returning to financial markets. The recently rekindled hope in negotiations is once again giving way to a sober assessment of risks. The diplomatic tug-of-war is increasingly developing into a balancing act. Signals of de-escalation are followed by new military incidents, and with them, new doubts about a lasting calming of the situation. Investors are thus continuing to balance geopolitical risks in the Middle East, monetary policy uncertainties, and the upcoming earnings season.
The interplay between military escalation and diplomatic overtures creates a field of tension that pushes prospects of new record highs on the German stock market into the background for now.
DAX
Iran War: Geopolitical risks increase again after combat pause
Following the recent pause in fighting between Washington and Tehran, the U.S. Army has reported Iranian missile attacks in the Middle East. „All Iranian missiles were successfully intercepted,“ it stated. Additionally, targets in Iran were attacked by the U.S. and Saudi Arabia, it was further reported.
Fed could leave interest rate level unchanged – All eyes on Kevin Warsh
Investors' focus this evening will therefore logically be on the Fed's interest rate decision (8:00 PM) and the subsequent FOMC press conference with US central bank chief Kevin Warsh. Investors typically scrutinize said speech for monetary policy hints.
Whether the Fed will turn the screw on interest rates upwards remains questionable. According to the CME Group's „FedWatch Tool,“ 68.5 percent of market participants expect an interest rate pause, and 31.5 percent expect an interest rate hike, totaling a quarter of a percentage point. The current interest rate range is 3.50 to 3.75 percent.
Focus on GDP growth rates for Germany, the Eurozone, and the USA – US price data could send monetary policy signals
On Thursday, initial estimates for the GDP growth rate for the Federal Republic of Germany (10:00 AM) and for the Eurozone (11:00 AM) are also on the agenda.
Preliminary inflation data for Germany are expected to attract attention around 2:00 PM.
At 2:30 PM, the core personal consumption expenditures rate in the US will be released, which is expected to provide inflation signals.
At the same time, the GDP growth rate for the US region will also be published.
The reporting season continues to pick up speed in this country.
Even during the ongoing reporting season, investors should continue to keep an eye on potential catalysts. Today, Wednesday, the results from Deutsche Bank (ISIN: DE0005140008), BASF (ISIN: DE000BASF111), and Porsche (ISIN: DE000PAG9113) are in focus. On Thursday, BMW (ISIN: DE0005190003), HeidelbergCement (ISIN: DE0006047004), Adidas (ISIN: DE000A1EWWW0), MTU Aero Engines (ISIN: DE000A0D9PT0), and Puma (ISIN: DE0006969603) will report, followed by Linde (ISIN: IE000S9YS762), Siemens Healthineers (ISIN: DE000SHL1006), and Covestro (ISIN: DE0006062144) on Friday.
