Stock exchange index DAX commences with lowered strength, Federal Reserve's momentum alleged to be waning.
Predicting the German Stock Market's Trend on Thursday
The upcoming day on the German stock markets seems poised for a sluggish start, owing to uncertainties surrounding the US Federal Reserve's interest rate decision, the volatile Middle East conflict, and the USA's stance on the situation.
According to the X-DAX, the DAX is anticipated to kick off the day with a 0.5 percent dip, landing around 23,202 points – a level last visited in early May. On the previous trading day, the leading index dipped beneath an essential support level. The EuroStoxx 50 is also projected to open with a 0.6 percent decrease.
Amid the uncertainty, the Israeli military has reported renewed attacks on Iranian targets, with facilities in Tehran and a heavy water reactor near Arak under fire. Following these attacks, Iran reportedly fired several rockets into Israeli territory. The US response to this deepening conflict between Iran and Israel remains unclear, with President Donald Trump yet to take a concrete stance. Trump has so far merely stated they are pursuing a "total, complete victory."
Regarding the US Federal Reserve, they chose to keep their key interest rate unchanged and did not address Trump's demands for easing. However, they hinted that the imposed tariffs could lead to price increases and slower economic growth. New momentum from the US markets is not expected before Friday at the earliest, due to the New York Stock Exchange being closed on Thursday due to a holiday. The pre-market signals a slight loss for the Dow Jones.
In Germany, MTU shares could gain from a buy recommendation by Deutsche Bank Research. On Tradegate, the shares of the engine manufacturer are trading just over one percent above Wednesday's Xetra closing price. In the SDAX, Medios shares surged by almost eight percent on Tradegate, as the specialty pharmaceutical company plans to buy back up to one million of its own shares.
Containing elements from dpa-AFX
U.S.-Iran Conflict: Expected Reactions
The US is expected to reinforce Israel's right to self-defense and denounce Iranian aggression, a stance they have historically maintained. They may deploy additional military and air forces in the region, share intelligence with allies, impose and tighten sanctions on Iranian entities, and engage diplomatically to de-escalate tensions and prevent direct US involvement in combat.
Impact on US and German Stock Markets
Geopolitical uncertainty often increases market volatility, causing investors to shift towards safe-haven assets like gold, US Treasury bonds, and the Swiss franc. Energy stocks might see gains due to potential disruptions in global oil supply. In defense and aerospace sectors, companies like Lockheed Martin and Raytheon could benefit from increased defense spending. Tech and growth stocks might face pressure as investors grow cautious.
In Germany, export-dependent industries and those with high energy consumption may be adversely affected by geopolitical instability and higher energy prices, potentially driving down the DAX index.
Investors should stay vigilant, diversify their portfolios, and expect short-term market turbulence due to geopolitical risks.
- The US response to the deepening conflict between Iran and Israel in the political sphere could have a significant impact on the general-news landscape, potentially affecting the industry and finance sectors of the stock market.
- Unpredictability in the US-Iran conflict might cause global market volatility, not only in the US stock market but also in Germany. This volatility may specifically impact export-dependent industries and those with high energy consumption within the German economy, potentially affecting the DAX index.
