Ahead of the eagerly awaited US jobs report, the markets are on high alert. Investors are likely to scrutinize the labor market data meticulously and put them through their paces in relation to US monetary policy. For market participants, the realization remains at the end of the week that geopolitical and monetary policy baggage has been prematurely swept under the rug.
Even though investors have apparently been able to shake off the cocktail of worries stemming from geopolitical and monetary policy uncertainties for the time being, the overall situation is likely to remain fragile.
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Iran War remains smoldering – Geopolitical risks do not subside
Developments in the Iran conflict also weighed on investors this week. The US military had attacked targets in Iran for the first time since late July., whereupon the Revolutionary Guards responded with missile attacks on US bases. The Middle East conflict thus remains a risk that is likely to continue to hang like the sword of Damocles over investors' heads.
German inflation lower than expected – ISM Purchasing Managers with mixed signals
According to initial estimates, inflation in the Federal Republic of Germany was 2.9 percent in August (compared to the same month last year), placing it slightly below preliminary estimates of 3.0 percent, following 2.8 percent in July.
Meanwhile, the so-called US ISM manufacturing purchasing managers' index came in below expectations at 54.6 points (55.2 points), compared to 55.6 units in the previous month.
The „JOLTs“ (Job Openings and Labour Turnover Survey) provided the first indications of the US labor market data on Tuesday. At 7.271 million job openings, they came in lower than expected (7.271 million), following 7.182 million previously.
Meanwhile, the counterpart to the ISM index for the services sector rose more strongly than expected, coming in at 55.4 points compared to an anticipated 54.3 points.
US labor market data could make or break it
The US employment data (non-farm payrolls), expected this afternoon at 2:30 PM, could decide the success or failure of the stock market week. Estimates project a non-farm employment increase of 56,000 jobs (previous: -23,000). Consequently, the unemployment rate could stand at 4.1 percent, remaining unchanged compared to the previous month.
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