In a challenging market environment of monetary policy, Middle East risks, and AI hype, the DAX was able to mark a new record high on Thursday. The latest US labor market report should have been to investors' liking, as it has somewhat eased concerns about interest rate hikes.
Due to the holiday, the stock market will be closed on Wall Street today, Friday.
DAX
Iran conflict remains simmering – Middle East risk should repeatedly urge caution
The Middle East conflict has not entirely let go of investors this week either. Despite a framework agreement between the US and Iran, both parties had recently attacked each other militarily, so the geopolitical uncertainty is unlikely to have completely dissipated. Even if the conflict in question is currently only present on the sidelines, the risk should not be underestimated.
German and European inflation lower than expected
According to preliminary figures, the German inflation rate (compared to the same month last year) was 2.3 percent, lower than expected (2.6 percent), after being 2.6 percent previously.
Eurozone inflation was also below expectations at 2.8 percent (3 percent), after 3.2 percent in the previous month, as the figures showed on Tuesday.
The ISM Manufacturing PMI in the US failed to meet pre-release expectations of 54 points on Wednesday, coming in at 53.3 points, down from 54 units in the previous month.
Fed Chairman Kevin Warsh reiterates priority of price stability in the US
In a highly anticipated speech at the ECB Forum on Central Banking in Sintra, Portugal, the new Fed Chairman Kevin Warsh reaffirmed the priority of price stability in the US mid-week. At the same time, he pointed to the Fed's institutional independence as the basis for monetary policy credibility.
US jobs data significantly lower than expected – unemployment rate however declining
The US labor market data (Non-Farm Payrolls) served as the week's highlight, but with 57,000 new jobs, it failed to meet expectations (110,000 units). In the previous month, (revised) 129,000 new jobs were created.
However, the separately determined unemployment rate in this context fell by 0.1 percentage points to 4.2 percent.
What remains striking is that, according to the „FedWatch Tool“ of CME Group, a total of 82.4 percent of market participants now expect an interest rate pause at the meeting on June 29, and only 17.6 percent expect an interest rate hike of 25 basis points. A week ago, a total of 29.9 percent had expected an interest rate step.
Dow Jones Industrial Average Index
