Markets are currently navigating between corporate earnings and geopolitical headlines. The Iran conflict is likely to remain the dominant risk for financial markets. As long as no sustainable de-escalation is apparent, developments could determine the direction of stock markets more than many corporate news items. The earnings season is likely to show whether the high valuations of numerous technology stocks are still covered by earnings growth. Doubts about the momentum of the AI boom could cause higher volatility in the short term.
The focus of recent days has particularly been on new US inflation data and, consequently, monetary policy impulses.
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Iran War: Risks flare up again – Geopolitical tensions between the USA and Tehran
The renewed Iran conflict has increasingly occupied investors on both sides of the Atlantic in recent trading days. The US and Iran attacked each other again overnight into Friday. Geopolitical risks could continue to weigh on overall risk appetite in light of the Middle East conflict.
US inflation rises less sharply than expected in June – monetary policy concerns lose momentum for now
New US price data were eagerly awaited on Tuesday. The US inflation rate in June (compared to the same month last year) was 3.5 percent, significantly lower than economists had estimated (3.8 percent). In May, price pressure in the world's largest economy had still been 4.2 percent.
The core inflation rate, which excludes the drivers of energy and food, was also below expectations at 2.6 percent (2.8 percent), after 2.9 percent in the previous month.
US producer prices fall in June – inflationary pressure eases somewhat
Producer prices in the U.S. fell by 0.3 percent in June, after economists had previously expected them to stagnate. In the previous month, the increase had been 0.6 percent compared to April.
US retailers saw their sales increase by 0.2 percent in June compared to the previous month. In May, the increase had been 1.0 percent. However, part of the rise at that time was still attributable to higher gasoline prices.
According to the latest data from the EU's statistical office Eurostat, EU inflation in June (compared to the same month last year) stood at 2.8 percent, as expected, down from 3.2 percent in May.
At the end of the week, the preliminary consumer sentiment data from the University of Michigan (4:00 PM) is still worth noting.
US Earnings Season Gaining Momentum
The unofficial start to the US earnings season was traditionally given on Tuesday by major US banks such as Goldman Sachs (ISIN: US38141G1040), JPMorgan (ISIN: US46625H1005), and Bank of America (ISIN: US0605051046), which were able to present strong corporate figures. In the new trading week, the focus should also be on the earnings season, among other things, which is also starting on the German side.
