With the escalation in the Middle East, an old source of conflict is reigniting. A risk factor that many investors had already written off is suddenly returning to the center of attention. Above all, concerns about rising energy prices and potential disruptions to important trade routes are likely to limit risk appetite for now. Markets are currently balancing between peace speculation and geopolitical slippery ice.
Besides the geopolitical threat, the earnings performance of US companies is likely to move back into focus. Should quarterly figures and outlooks fall short of high expectations, the already increased uncertainty could be further amplified. Conversely, convincing corporate reports would have the potential to overshadow some of the geopolitical concerns, at least in the short term.
Market participants are also eagerly awaiting new US inflation data, expected on Tuesday.
Dow Jones Industrial Average Index
US inflation dynamics could lose some steam – investors hope for monetary policy stimulus
From the perspective of the economic calendar, it should be particularly exciting on Tuesday with new US inflation data (2:30 PM). Economists expect price pressure in June (compared to the previous year) to have been 3.8 percent, lower than in May (4.2 percent). For the core inflation rate, which excludes the drivers of energy and food, a status quo of 2.9 percent is expected.
Kevin Warsh is expected before the U.S. House of Representatives on Tuesday and Wednesday
In the late afternoon, the expected statement from new Fed Chairman Kevin Warsh before the House of Representatives is likely to provide significant impetus (4:00 PM). On Wednesday at the same time, another statement is also expected.
China data in focus and US producer prices in focus
On Tuesday night into Wednesday, Chinese economic data could provide corresponding guidance for mid-week trading. At 4:00 AM, the GDP growth rate, new industrial production data, and retail sector data are expected.
At 2:30 PM, the US producer price index will also be released, which could provide important inflation signals and, consequently, indications for monetary policy.
Preliminary consumer sentiment data (University of Michigan) will wrap up the week at 4:00 PM.
Numerous US stock market heavyweights will release their earnings for the past fiscal quarter starting Tuesday.
The ramping up earnings season could provide important momentum, as US companies present their results for the past business quarter.
On Tuesday, Bank of America (ISIN: US0605051046), Citigroup (ISIN: US1729674242), Goldman Sachs (ISIN: US38141G1040), JPMorgan (ISIN: US46625H1005), and Wells Fargo (ISIN: US9497461015) will report.
On Wednesday, the figures from BlackRock (ISIN: US09290D1019), Johnson & Johnson (ISIN: US4781601046), and Morgan Stanley (ISIN: US6174464486) will be in focus.
On Thursday, Netflix's (ISIN: US64110L1061) earnings results are likely to provide important impetus.
