After negotiations between Iran and the US held over the weekend ended without a breakthrough, investors are likely to react with disappointment at the start of the week. Even a non-result is a result for the stock market. Investors are likely to increasingly brace themselves for further stalemate and thus an extended period of heightened risk aversion.
In a trading week that is relatively manageable from an economic calendar perspective, it is still important to keep an eye on potential catalysts. In particular, various Fed bankers are in focus.
Middle East conflict is not letting investors go for now – Weekend meeting between the USA and Iran without agreement
Starting today at 4:00 PM German time, Donald Trump and the US Navy will no longer allow ships to pass through the Strait of Hormuz if they are heading for an Iranian port or leaving the strait coming from one. In this context, Trump is trying to regain control of the strategic bottleneck. Currently, Iran decides who is allowed to pass through the strait after payment of a fee.
Overall, in the Iran conflict, the core problem is likely less a specific negative scenario and more the range of possible developments. Everything is on the table, from a diplomatic solution to further escalation.
Without solid progress in said war, any recovery is likely to remain vulnerable. In search of direction, market participants are getting almost nothing but question marks.
US producer prices and various China data in focus
Already this afternoon, the release of US producer prices is on the agenda (2:30 PM). Investors should keep an eye on these data in relation to inflation developments.
As the US inflation data released on Friday already showed, price pressure in March (compared to the same month last year) was 3.3 percent, higher than expected (3.2 percent), after 2.4 percent in February, marking the strongest increase since May 2024. The effects of the Iran war were already recognizable in the data. In particular, the increase in oil and gas prices had driven inflation, it was stated.
Mid-week, it's also important to keep an eye on the publication of the „Beige Book“ at 8:00 PM this evening.
Speeches by John Williams (New York, 2:35 PM) on Thursday and Thomas Barkin of the Richmond Fed on Friday (6:15 PM) will be in the spotlight.
As planned, the US central bank Federal Reserve (Fed) will decide on the future key interest rate level on April 29th. According to the CME Group's „FedWatch Tool,“ the chance of an interest rate pause is currently 96.4 percent.
On the night from Wednesday to Thursday, last but not least, Chinese economic data will move into the spotlight (04:00 AM). The GDP growth rate, industrial production data, as well as retail sales data should be scrutinized for economic indicators.
Dow Jones Industrial Average Index
