Following the record chase, the realization is returning that geopolitical risks can become the dominant market theme again at any time. Between Middle East risks and inflation concerns, the market is struggling for clear direction. Even though the stock market has grown accustomed to the constant background noise of crises, consisting of threatening backdrops and diplomacy, recent spikes in energy prices are a thorn in investors' sides. These fuel concerns that inflation could regain momentum and put additional pressure on central banks to act. On the one hand, further record highs are alluring; on the other hand, reaching for the cash button remains tempting in light of stellar price levels. That investors are once again taking a deep breath and sorting through all the facts in this context should not come as too much of a surprise.
From the perspective of the economic calendar, investors on Wednesday will focus in particular on the minutes of the recent Fed central bank meeting (Fed Minutes). Important impulses could also be provided on Friday by various purchasing managers.
DAX
Geopolitical risks in the Middle East are flaring up again
Geopolitical risks in the Middle East have caught up with investors on the German stock market once again. According to Trump, the US is not seeking an extension of the ceasefire agreement with Iran. August 17 would have been the deadline by which both Iran and the US were supposed to reach a final peace agreement. A document was signed on June 17 providing for a 60-day period for this purpose.
Trump threatens Oman with military strike
US President Donald Trump also recently threatened Oman with a military strike. „If Oman gets in our way, we will bomb them to smithereens,“ Trump told the US broadcaster Fox News. Oman is not considered an active party to the conflict. However, negotiations are currently underway with Iran regarding the rules in the Strait of Hormuz.
Purchasing Managers' Index (S&P Global) on both sides of the Atlantic in focus on Friday
Initial estimates for the S&P Global purchasing managers„ indices for the manufacturing, services, and composite sectors are expected at 09:30. Their counterparts for the eurozone (11:00) and the US (15:45) could also provide important momentum.
US earnings season: quarterly results from second- and third-tier companies could also provide momentum here at home
However, in the reporting season that is now drawing to a close, there could still be some exciting momentum from across the Atlantic. On Thursday, the results for the past fiscal quarter are expected from Alibaba (ISIN: US01609W1027), Deere & Co (ISIN: US2441991054), and Walmart (ISIN: US9311421039). The latter figures are likely to provide momentum regarding the retail sector, among other things.
