In addition to developments in the Middle East conflict, the trading week will focus in particular on the monetary policy decisions of the Federal Reserve (Fed) and the European Central Bank (ECB).
However, the geopolitical uncertainties are likely to continue to be a major concern for investors. In particular, the development of the oil price should continue to be monitored closely. Investors could be temporarily distracted from developments in the Middle East by the upcoming US Federal Reserve meeting in particular. The Fed meeting is now casting its shadow and could increasingly overshadow market events.
Middle East conflict continues - focus remains on the Strait of Hormuz
The Middle East conflict is likely to remain the dominant theme on the German stock market in the middle of the week. The longer the conflict lasts, the greater the concern that it will become entrenched on the stock markets.
Some investors fear that the development could reach a tipping point where the effects are no longer just temporary, but could cause serious damage to the economy, supply chains and corporate profits.
Recently, individual ships were allowed to pass through the Strait of Hormuz with Iran's consent. US President Donald Trump recently also announced escort protection for tankers and criticized NATO for its restraint in this context.
Fed rate decision ahead in the evening - ECB, BoJ and BoE to decide on their interest rate levels on Thursday
From the perspective of the economic data calendar, there could be further impetus ahead of the highly anticipated Fed interest rate decision. US producer prices are expected (13:30), which could send out inflation signals and thus also monetary policy signals.
Investors hope for monetary policy stimulus from Jerome Powell
In the evening, the Fed's key interest rate decision will come into focus (19:00). However, a change in interest rates by the US monetary authority would come as a major surprise. According to the CME Group's „Fed Watch Tool“, only 1.1% of market participants currently expect an interest rate hike (25 basis points). In contrast, there is a 98.9% probability of a pause in interest rates. The interest rate band remains at 3.50 to 3.75 percent.
Jerome Powell is expected to address the public at 7:30 pm.
In view of the conflict in the Middle East and the associated rise in oil prices and the unforeseeable impact on the global economy, market participants are increasingly concerned about a rise in inflation. In this context, the Fed could possibly be forced to leave the key interest rate unchanged for longer than expected or even raise it again.
ECB likely to leave key interest rates unchanged
The European Central Bank (ECB) will announce the future key interest rate level on Thursday (14:15). However, no change is expected in the so-called deposit rate, which is currently quoted at 2.0 percent.
However, investors should turn their attention half an hour later to the ECB press conference with President Christine Lagarde (14:45).
It should be noted that the Bank of Japan (BoJ/04:00)) and the Bank of England (BoE/13:00)) will also decide on future monetary policy on Thursday.
DAX
Oil price (WTI)
