2024-04-15 08:27:50
The rising tensions in the Middle East are also likely to influence the stock market. There are now fears that oil prices will rise.
The conflict between Israel and Iran, which intensified significantly over the weekend, is likely to weigh on the mood on the German stock market at least at the beginning of the new week. The Iranian army attacked Israeli targets with around 300 missiles and drones on Saturday. The Israeli military said it successfully repelled the attack. Israel had support from the US, Britain, France and Jordan. A military response from Israel can be expected. There were warnings around the world that the conflict would further escalate. You can find current developments in the conflict in our news blog.
The extent of the burden on the German stock market will likely depend crucially on whether the actions remain temporary or whether there is a war between Israel and Iran. Other countries in the Middle East could then be drawn into this. The region is particularly important for the global economy because of its oil wealth.
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Due to the situation in the Middle East, the focus is primarily on the price of oil. Various experts are currently expecting that the price could rise. “Oil and gold will increase,” capital market expert Mohamed El-Erian told Handelsblatt. He also expects an increase in US government bonds.
The conflict is likely to at least temporarily push the issue of interest rate developments, which has so far dominated the stock market, into the background. The quarterly reporting season, which unofficially began with the presentation of figures by several US banks on Friday, may not initially play its usual major role.
“Swing exchange” and “breather”
In addition, after the strong first quarter and a weak April so far, stock market experts are assuming that the mood on the stock market will remain moody for the time being. You therefore see the Dax still in correction mode. The optimists among them spoke on Friday of a “swinging market” and a “breather” before the escalation of the Israel-Iran conflict. Nobody expected the Dax to make a quick new attempt to climb back towards the record high of 18,567 points that it reached after Easter.
However, experts considered a course correction towards 17,700 points to be entirely possible given the appropriate news situation. Price indicators available at the weekend show that this forecast will probably be beaten, at least at the start of trading in the new week.
Banks present figures
Despite the conflict, the topics of interest rate developments and quarterly figures are unlikely to disappear completely from investors’ minds. In the USA, according to the March inflation data, at least that’s what chief market analyst Jochen Stanzl from CMC Markets believes, “both the June and July dates for an interest rate cut are off the table.” The only reason this did not lead to a major decline on the stock markets was that the majority of the market assumed that the US economy could tolerate higher interest rates for a longer period of time. “Now the reporting season must show whether this also applies to individual companies.”
The test will not be long in coming: the US investment bank Goldman Sachs will present figures on Monday and Morgan Stanley, Bank of America and the pharmaceutical and consumer goods company Johnson & Johnson on Tuesday.
In Europe, the start will be made by chip industry supplier ASML on Wednesday and in this country by the DAX group Sartorius. The pharmaceutical and laboratory equipment manufacturer plans to publish its quarterly balance sheet on Thursday. The consumer goods manufacturer Beiersdorf previously reported on its sales development on Tuesday.
Industrial production in view
However, the reporting season doesn’t really get going until the following week. The potential for disappointment could be higher in the USA, because while the bar is set high in the world’s largest economy, analysts in Europe have already lowered their expectations somewhat, as analyst Frank Klumpp from LBBW states.
On the economic side, the main focus in the new week in the USA will be on the retail data for March, which is due at the beginning of the week. After all, the question is whether “the US consumer has remained indestructibly willing to spend,” as Christian Apelt from Helaba writes. He and Christoph Balz from Commerzbank are no longer expecting the same strong increase as before, but at least they are still expecting a moderate one. Among the other important US data, industrial production will come into focus on Tuesday. If both data turn out to be stronger than expected, LBBW expert Klumpp expects this to further fuel the current US interest rate scenario of “higher interest rates for a longer period of time”.
In this country, the ZEW economic expectations could still move before then. LBBW and Helaba are expecting a slight increase following recent positive surprises in the leading indicators for the German economy and globally. The expected economic upswing now appears to be taking hold, writes Helaba analyst Stefan Mütze. The recent increase in production, including in the German energy-intensive industry, shows that it should not be written off despite the difficult economic conditions.