Given stagnant oil prices, investors in the German stock market can breathe a sigh of relief for now. The oil market is currently throwing the stock markets a small lifeline—but nothing more. Caught between interest rate worries and geopolitical risks, investors searching for their North Star currently have to recalibrate their compass. For investors, it is now a matter of re-weighting opportunities and risks. The geopolitical threat backdrop between Washington and Tehran has obviously once again become too significant for investors to embark on a light-footed hunt for records. At the very latest, the depressing realization has now filtered through to the market that the risks in the Middle East were prematurely swept under the rug and thus clearly underestimated. Investors are now focusing on the US labor market data and thus potential monetary policy impulses.
DAX
ADP data comes in weaker than expected
Investors are likely eagerly awaiting the release of new US employment data, which is expected on Friday (2:30 PM). On Wednesday afternoon, the ADP employment figures came in weaker than expected at 47,000 [Note: contextually meant 47k vs expected, keeping literal translation] compared to the expected 38,000. Not least, this data provides a first taste of the official US employment figures. If tomorrow's NFPs miss expectations, it could somewhat alleviate general interest rate concerns.
Economists expect a non-farm payroll increase of 58,000 jobs, following a decrease of 23,000 jobs reported in July. The unemployment rate is estimated to stand at 4.1 percent, remaining unchanged compared to the previous month.
Oil price increase stopped for now – Hopes for a „short-lived“ Middle East conflict
The recent rise in oil prices also appears to be halted for now, which should ease inflationary pressure somewhat overall. US President Donald Trump had made it clear that the past attacks on Iran would be of short duration. At the beginning of the week, the war between Iran and the US had flared up militarily for the first time in weeks. This morning, however, Iran attacked the Gulf state of Kuwait again.
Oil price (West Texas Intermediate)
