A framework agreement reached between the US and Iran is likely to bring relief at the beginning of the week, potentially creating tailwinds in the markets. The diplomatic bridge between Washington and Tehran fuels hope for a sustainable de-escalation and could mark a geopolitical turning point, which is likely to noticeably change market risk perception. A pinch of residual doubt is likely to remain until the final signing, as investors have been disappointed too often in recent weeks and months.
With diminishing Middle East risks and a potentially more relaxed monetary policy landscape, investors could increasingly refocus on growth themes. In particular, the AI narrative is likely to receive new momentum, especially after recent developments surrounding SpaceX (ISIN: US84615Q1031) on Friday underscored hopes for a continued innovation boom in the technology sector.
Dow Jones Industrial Average Index
US and Iran agree on deal – Possible sigh of relief in the market
The US and Iran have reached an agreement, paving the way for further negotiations. According to the Reuters news agency, the agreement is said to encompass a total of 14 points. For example, all military actions are to be ended immediately and definitively on all fronts, including the fighting in Lebanon. Furthermore, the agreement is said to include a fundamental commitment from Tehran to forgo nuclear weapons in the future. The Strait of Hormuz is also reportedly to be reopened and cleared for shipping traffic.
China data and Fed bank meeting in focus – All eyes on Kevin Warsh
Important guidelines for Tuesday's trading could be provided by Chinese economic data overnight Monday to Tuesday (4:00 AM). New data on industrial production and retail sales are expected.
On Wednesday, retail sales for the United States are expected first (2:30 PM).
At 8:00 PM, the Fed's interest rate decision will be announced, followed at 8:30 PM by the subsequent FOMC press conference with the new chairman of the central banks, Kevin Warsh. Consequently, his speech should be analyzed for hints on monetary policy.
The CME Group's „FedWatch Tool“ currently indicates that a total of 96.6 percent of market participants expect an interest rate pause and 3.4 percent expect a quarter-point interest rate cut. The interest rate range itself is currently between 3.50 and 3.75 percent.
SpaceX successfully completes IPO – Largest IPO in history
The space company SpaceX had a successful stock market debut last Friday. In the largest IPO in history, the initial stock price was $150, up from the offering price of $135, making it around eleven percent higher. A total of approximately 555.6 million shares were sold at $135, allowing the company to earn $75 billion. With a valuation of $1.77 trillion, SpaceX is among the most valuable US companies.
