Markets continue to fluctuate between AI euphoria and geopolitical nervousness. The constant interplay of hopes and setbacks in the conflict between the US and Iran is likely to increasingly tax investors' nerves. Many investors now appear geopolitically weary after earlier hopes for a de-escalation were repeatedly dashed. Following NVIDIA's quarterly figures, the focus both here and on Wall Street is likely to quickly shift back to geopolitical developments in the Middle East. New hopes for a diplomatic solution between Washington and Tehran, in particular, are confirming the recent choppy stock market. Investors are once again betting on signals of a de-escalation in the relationship between the US and Iran, even though the diplomatic tug-of-war continues to resemble geopolitical ping-pong.
DAX
No solution to the Iran conflict so far – uncertainty likely to persist
A solution to the Iran conflict is still waiting. Most recently, according to insiders, Iran's Supreme Leader ordered that highly enriched uranium must not be delivered abroad. The export is considered one of the central demands of the USA for the settlement of the conflict.
Ultimately, investors are likely to remain unsettled regarding the Iran conflict. A sustainable diplomatic peace pact does not appear to be foreseeable in this context.
Chinese data weakens – Effects of the Iran conflict on the economy visible
At the beginning of the week, investors were already confronted with Chinese economic data. The latest figures on industrial production signaled the weakest growth in three years.
Retail sales also climbed only 0.2 percent in April compared to the previous year, after 1.7 percent in March.
Fed minutes fuel interest rate fears - GfK and ifo indices slightly better than expected
Late Wednesday evening, Fed minutes revealed that a majority of US policymakers consider interest rate hikes likely if inflation persists. FOMC members noted that overall inflation had recently risen, partly due to the Iran conflict and the associated increase in oil prices.
According to the „Fed-Watch-Tool,“ currently 2.8 percent of market participants expect an interest rate hike of 25 basis points and 97.2 percent expect an interest rate pause at the upcoming scheduled meeting on June 17th.
GfK consumer confidence fell slightly better than expected by economists, at -29.8 points (-34 points), after -33.1 units in the previous month.
The ifo Business Climate Index brightened slightly in May, contrary to expectations. In the said month, the index climbed to 84.9 points, up from 84.5 points in April (revised). Economists had expected a decline to 84.1 points beforehand.
The Iran conflict and the associated economic uncertainties are likely to continue to maintain high levels of uncertainty, thus negatively impacting sentiment.
Dow Jones Industrial Average Index
NVIDIA Stock: Quarterly Results Stronger Than Expected
AI chip manufacturer NVIDIA (ISIN: US67066G1040) was able to increase its quarterly revenue by 85 percent compared to the same quarter of the previous year, reaching $81.6 billion. Operating profit (adjusted for special effects) increased by around 150 percent to $53.5 billion. The company forecasts revenue for the second quarter at $91 billion (+/- 2 percent).
