Investors are initially struggling to break through the 25,000-point mark. The joy over the recently achieved framework agreement between Washington and Tehran has already given way to a sober reassessment. The agreement provided short-term relief, but investors are increasingly recognizing that many details remain unclear and geopolitical risks are far from being off the table.
The upcoming Fed meeting now casts its shadow. Investors will likely be paying close attention to whether Warsh acts as an independent currency hawk or if his statements give the impression that he could act as an extension of Donald Trump. Consequently, sensitivity to every nuance in the central banker's choice of words is expected to be high.
SpaceX (US84615Q1031) shares continue to be a topic of conversation. It should soon become clear whether the shares primarily serve as a playground for short-term speculators or if investors with a long-term investment horizon will determine the course of events.
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Despite framework agreement between the US and Iran: Geopolitical risks could continue to smolder
Despite the recently reached framework agreement between the US and Iran, which is scheduled to be signed in Switzerland on Friday, geopolitical risks are unlikely to fully abate. According to current information, the ceasefire agreed upon in April is to be extended by an additional 60 days, and the Strait of Hormuz is to be reopened. However, it remains unclear whether a lasting peace will be achieved in the Middle East.
US Retail Sales and Fed Interest Rate Decision and FOMC Press Conference in Focus
In addition, US retail sales are in focus this afternoon (2:30 PM).
In the evening (8:00 PM), the Fed's key interest rate decision will be announced, followed 30 minutes later by the subsequent FOMC press conference with new Fed Chair Kevin Warsh, which investors are likely to scrutinize for monetary policy clues. At the same time, market participants are likely to weigh the economic damage caused by the conflict and whether the Fed might respond with an adjustment to its monetary policy course.
Investors expect a pause in interest rates – small probability of an interest rate hike
According to the CME Group's „FedWatch Tool,“ 99.6% of market participants expect a pause in interest rates, and only 0.4% expect a 25 basis point rate hike.
On Thursday, weekly initial jobless claims in the US will also come into focus.
The trading week closes with new data on German producer prices (08:00 AM).
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