The recent summer carefree spirit has come to an abrupt end. Instead of unburdened record-breaking, a summer blues marked by uncertainty could now dominate stock market activity. After the recent DAX record high, unease has returned to the stock markets. The renewed escalation in the Iran conflict has noticeably dampened investors' risk appetite. While hopes for a diplomatic solution persist, recent military developments and increased geopolitical tensions serve as a wake-up call for the stock markets. After the record-breaking rally, the realization is returning that geopolitical uncertainties can once again become the dominant market theme at any time. Investors are caught between Middle East risks and the hope for a diplomatic solution.
In addition to monetary policy developments, the US earnings season is also providing plenty of conversation at the stock exchanges and is eagerly awaited.
DAX
Iran war concerned by investors again - Between escalation fears and hope for diplomacy
The Middle East risks, which had recently faded into the background, have resurfaced this trading week. The reciprocal attacks between Iran and the USA have fueled geopolitical risks and made investors acutely aware that the issue of an „Iran war“ has clearly not yet been put aside. The US President had also declared the recently signed framework agreement and the ceasefire with Iran to be over. "I think it's over," he said on the sidelines of the NATO summit in the Turkish capital, Ankara. According to Trump, Iran, however, wants to „absolutely make a deal,“ it was said.
ISM Services PMI Remains Above 50
In an overall relatively manageable economic data calendar, new data on the ISM Purchasing Managers' Index for the US services sector were published at the beginning of the week. With 54 points, it met expectations made in advance. However, the previous month showed 54.5 points. A value above 50 signals growth, among other things.
Fed meeting minutes highlight focus on price stability
Midweek, investors were preoccupied on Wednesday evening and Thursday by the minutes of the most recent Fed meeting. The central bankers agreed to remove language that had indicated a tendency towards monetary easing at upcoming meetings. At the last meeting, held about two weeks ago, the policymakers agreed to emphasize the goal of price stability in the accompanying text.
US earnings season casts a shadow
The eagerly awaited kickoff to the US earnings season could also contribute to restraint in the markets. Next Tuesday, the results for the past fiscal quarter from Bank of America (ISIN: US0605051046), Citigroup (ISIN: US1729674242), Goldman Sachs (ISIN: US38141G1040), JPMorgan (ISIN: US46625H1005), and Wells Fargo (ISIN: US9497461015) are expected. On Wednesday, BlackRock (ISIN: US09290D1019) and Morgan Stanley (ISIN: US6174464486), among others, will report.
Dow Jones Industrial Average Index
