The effects of the geopolitical escalation in the Middle East are likely to have a greater impact on investors in the coming days. A noticeable escalation of the conflict between the parties involved could turn the market reaction into greater risk aversion.
Investors could be distracted from the Middle East conflict time and again by the publication of US economic data. The official US labor market report is likely to attract particular interest on Friday.
Development of geopolitical tensions in the Middle East: uncertainty could persist
The geopolitical developments in the Middle East could have a negative impact on general risk appetite. It remains to be seen how long the conflict will last.
It remains to be seen whether there will be negotiations and thus a diplomatic solution. Iran recently denied a media report that Tehran was prepared to negotiate in the USA. According to the head of the Security Council, Larijani, his country will continue to defend itself.
Meanwhile, Trump hinted in an interview with the Daily Mail that the conflict with Iran could last four weeks.
„We expect it to take about four weeks. It's always been a four-week process, so - as strong as it is, it's a big country, it's going to take four weeks - or less.“.
ISM purchasing managers, China data and „Beige Book“ in view
From the perspective of the economic data calendar, the ISM Purchasing Managers' Index for the manufacturing sector should be observed this afternoon (16:00).
Important economic data from China is expected in the night from Tuesday to Wednesday (02:30). The Purchasing Managers' Index (PMI) for the services and manufacturing sectors could provide important impetus.
The counterpart to the ISM Purchasing Managers for the services sector awaits investors in the middle of the week in the afternoon (16:00).
The „Beige Book“ should also not be forgotten on Wednesday evening (20:00), which reports on the current US economic situation.
US labor market report in focus on Friday: Economists expect a significant slowdown in job creation compared to the previous month
Consequently, the US jobs report (non-farm payrolls) is on the agenda for Friday afternoon (14:30). At the same time, the unemployment rate and the development of average hourly wages should also be observed.
Outside of agriculture, economists expect an increase in jobs of 60,000 units after 130,000 new jobs were created in January. According to estimates, the unemployment rate is likely to remain at the previous month's level of 4.3%.
Fed speeches still in focus - US monetary policy likely to remain an issue
As in the previous trading week, speeches by various Fed representatives should be kept in mind.
On Friday evening (6:00 pm) Mary Daly (San Francisco), Anna Paulson (Philadelphia) and Beth Hammack (Cleveland) are expected to compete.
Investors are likely to scrutinize all monetary policy indications, particularly with regard to the upcoming Fed meeting (March 18).
Dow Jones Industrial Average Index
