Midweek, the DAX is showing predominantly neutral territory initially. However, after exhausting and turbulent weeks, the optimists seem to have taken the helm again. The infamous calm before the storm prevails. Investors on both sides of the Atlantic continue to hope for a peace treaty ready for signing and thus a major breakthrough between the warring parties in the Middle East conflict.
Impulse could come from the US through the recently launched US earnings season.
DAX
Investors hope for renewed talks between Washington and Tehran
According to an ABC interview, Trump said that further talks between Washington and Tehran could take place as early as this week. US President Donald Trump had also recently announced that the war was „almost over.“.
However, investors are still denied a resilient diplomatic breakthrough on Wednesday. Talks in Pakistan between delegations from Iran and the United States had ended without results only on the weekend.
Thus, a noticeable skepticism remains. Investors have been disappointed too often in recent weeks for unbridled optimism to prevail now. Many market participants are therefore likely to continue to act with the handbrake on.
The Strait of Hormuz, which serves as a strategic bottleneck for global oil and natural gas trade, is also in focus. The US has been partially blocking the strait since Monday.
Economic Calendar: Few Potential Catalysts Ahead – Fed Officials in Focus
Even though the economic data calendar is extremely manageable this trading week, it's always worth paying attention to potential catalysts.
Investors should keep an eye on Chinese economic data on Wednesday night into Thursday (4:00 AM). Figures on GDP growth rate, industrial production, and retail sales are expected.
On Thursday, initial jobless claims in the US (2:30 PM) and a speech by John Williams of the New York Fed are usually on the agenda (2:35 PM).
Keep an eye on US industrial production data at 3:15 PM.
A speech by Thomas Barkin of the Richmond Fed (6:15 PM) will round off the trading week. However, investors are currently not harboring great hopes for US interest rate cuts, especially since the economic outlook remains uncertain due to the ongoing Iran conflict.
According to the CME Group's FedWatch Tool, the chance of an interest rate pause at the next scheduled meeting is currently at 99.5 percent. The interest rate range itself is currently at 3.50 to 3.75 percent.
US earnings season could send impulses
Investors should also keep an eye on both sides of the Atlantic today on the earnings reports for the past fiscal quarter from Bank of America Corp (ISIN: US0605051046) and Morgan Stanley (ISIN: US6174464486), as well as Netflix (ISIN: US64110L1061) on Thursday.
