As in previous weeks, the Iran conflict was the dominant theme in the market, which has now become a persistent issue. After US President Donald Trump announced a ceasefire between the United States and Iran, investors are looking forward to a highly anticipated meeting in Pakistan between the warring parties from Washington and Tehran.
At the end of the week, US inflation data will be on the agenda this afternoon, which investors should examine for monetary policy clues.
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Investors eagerly await planned meeting in Pakistan between USA and Iran
Investors will likely head into the weekend with mixed feelings, but also a cautious dose of hope. The focus of interest is now on the planned talks between delegations from the US and Iran. Investors are hoping for a major breakthrough and thus a lasting truce between the warring parties. Markets are still clinging to every sign of de-escalation.
However, uncertainty is likely to remain high. Should the negotiations collapse or no stable peace agreement be reached, this could catch many investors off guard. The markets may not currently be prepared for a renewed escalation.
Geopolitical developments could thus also remain the decisive key influencer in the new trading week.
Fed minutes: Inflation risk due to rising oil prices
Midweek, investors were confronted with the „FOMC Minutes.“ The minutes of the latest Fed monetary policy meeting, released late Wednesday evening, revealed that participants referred to the risk that „inflation could remain elevated for longer than expected given a sustained increase in oil prices.“ This could necessitate said interest rate hikes to steer inflation back to the targeted goal of 2 percent and anchor long-term inflation expectations stably.
Core personal consumption expenditures rate falls as expected - US GDP growth behind estimates
The core personal consumption expenditures rate was also published on Thursday, which rose 0.4 percent compared to the previous month, as expected, after also rising 0.4 percent in the previous month.
The US GDP growth rate climbed by 0.5% (compared to the previous quarter) and thus less strongly than expected (0.7%). In the previous quarter, GDP had stood at 4.4%.
Today's focus this afternoon will be the US inflation data (2:30 PM). The core inflation rate (excluding the drivers of energy and food) should also be considered in this context, as it is not least seen as the preferred inflation measure for the US Federal Reserve (Fed) with regard to inflation assessment.
The trading week concludes with the Consumer Sentiment Index (Uni Michigan) at 4:00 PM.
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