As in previous weeks, the geopolitical landscape remained the dominant theme. The Iran conflict continues to cause significant uncertainty and is likely to determine the fate of the stock markets in the new trading week. While nervousness could remain high, it may ultimately be more controlled. Many investors may have become accustomed to the constant news of crises. However, new military escalations could quickly tip the scales of risk appetite.
Besides the central bank meetings of the Fed and ECB, the earnings season also provided a distraction at times.
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GfK Consumer Confidence Worse Than Expected – German Inflation Increases
The GfK consumer confidence fell significantly below expectations at the beginning of the week with -33.3 points (-29.5 points), after -28.1 points in the previous month.
Preliminary data on German inflation signaled an increase mid-week. Consumer prices in April stood at 2.9 percent (compared to the same month last year), which was below expectations (2.7 percent). However, economists had anticipated a rate of 3.0 percent.
US Federal Reserve and European Central Bank Leave Key Interest Rates Unchanged
As expected, the U.S. central bank kept the key interest rate unchanged at a range of 3.50 to 3.75 percent. However, Jerome Powell also wants to remain on the Fed's board after his term officially ends in mid-May. „I intend to remain involved in this capacity,“ Powell said.
The European Central Bank (ECB) also left the deposit rate, which is significant for banks and savers, unchanged at 2.0 percent as expected, thus refraining from adjusting interest rates for the seventh time in a row. Rather, the ECB wants to wait until more data is available on the consequences of the Iran war.
German economy grows stronger than expected – ISM index in focus
The German economy grew by a surprising 0.3 percent in the first quarter of the year compared to the previous quarter, as the Federal Statistical Office announced in an estimate on Thursday. The background for this was an increase in private and government consumption spending as well as exports, it said.
On Friday, the ISM Purchasing Managers' Index for the manufacturing sector in the US is the last but not least item to watch (4:00 PM).
In addition, Berkshire Hathaway B (ISIN: US0846707026) will report on its results for the last business quarter. However, due to the holiday (Labor Day), the stock exchanges in Frankfurt am Main will remain closed.
Dow Jones Industrial Average Index
Apple reports record quarter
Numerous companies also presented their results for the past business quarter in the past trading days. In Apple's (ISIN: US0378331005) ranks, profits climbed by around 19 percent year-on-year to $29.58 billion. „We achieved record revenue in a March quarter,“ said Tim Cook.
However, „significantly“ higher costs are expected for so-called storage in the current quarter.
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