Geopolitical tensions between the US and Iran remain unresolved, creating a prolonged period of uncertainty. A stalemate between the two sides is holding back investors at home and keeping markets in limbo. Market participants are reacting accordingly with caution and avoiding risk. Investors are currently navigating the space between diplomatic signals and renewed risks of escalation. As long as no clear political roadmap is discernible, the environment remains fragile. The effects of the Iran conflict are increasingly noticeable in key German economic data.
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Iran conflict keeps investors on edge – Peace talks are unlikely for now
The geopolitical conflict between Iran and the USA continues to keep investors, especially here at home, on edge. The situation in the Middle East is still considered deadlocked, despite Donald Trump's recent extension of the ceasefire last Wednesday. Whether there will be a second round of negotiations between Tehran and Washington remains open.
ZEW Index falls significantly worse than expected
The ZEW index already caused unease in Frankfurt am Main on Tuesday. At a minus of 17.2 points, it fell significantly short of expectations (-5 points), after minus 0.5 points in the previous month.
„The economic consequences of the Iran war for the German economy go far beyond rising prices,“ said ZEW President Achim Wambach. „The concern about a long-term shortage of energy supply is hindering investment and weakening the effect of government stimulus.“.
In the US, retail sales grew stronger than expected at 1.7 percent compared to the previous month (1.4 percent). In the prior comparable period, they had only risen by 0.7 percent.
ifo business climate index falls to its lowest level in six years
The so-called ifo Business Climate Index could not reach the estimates made by economists beforehand (85.5 points). At 84.4 units, the index also lagged behind the previous month's value (86.3 points). „Hopes for a recovery are gone for now,“ said ifo President Clemens Fuest. The Munich-based company surveys around 9,000 managers of German companies monthly regarding the economic situation. The consequences of the Iran war would hit the German economy hard, it was said.
SAP: Strong cloud business boosts revenue
Thanks to a strong cloud business, Europe's largest software manufacturer SAP (ISIN: DE0007164600) was able to surprise. Overall, the group's revenue climbed by six percent year-on-year to around 9.6 billion euros. Revenue from cloud software rose by around 19 percent. However, in its quarterly report, SAP pointed out that the positive development from the beginning of the year would not necessarily continue. Growth in cloud business revenue is expected to slow down, it said.
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