FRANKFURT (dpa-AFX) - The German stock market is expected to remain dominated by the conflict in Iran. "The situation remains unchanged: investors continue to be driven by news flow from the conflict zone," commented Andreas Lipkow, Chief Market Analyst at CMC Markets. Given the extension of the US ultimatum to Iran, the Dax could attempt a new stabilization effort during this shortened Holy Week. Meanwhile, upcoming economic data is expected to reveal the initial domestic impact of the hostilities.
US President Donald Trump has now granted Iran until April 6 to reopen the Strait of Hormuz, a critical artery for global oil trade. The extended deadline underscores the US desire to end the conflict and reach a negotiated settlement, noted Thomas Altmann, Portfolio Manager at QC Partners. However, it also suggests that negotiations are proving to be anything but straightforward. While Trump recently pointed to "very good" talks, Iran has repeatedly denied that any negotiations are taking place.
Market expert Marcel Mussler noted, regarding the recent losses in the Dax, that investors have long since lost faith in Trump and his repeated attempts to soothe the markets. Since the start of the conflict, the German benchmark index has shed approximately 3,000 points, bringing its year-to-date decline to roughly nine percent. If investors spend the coming days merely pushing the ultimatum ahead of them, the environment will remain nerve-wracking, Mussler added.
From the perspective of Jochen Stanzl, Chief Market Analyst at Consorsbank, the best-case scenario for the Dax would be stabilization through next weekend: "Investors might agree to wait until after Easter before deciding whether or not to re-enter the equity market." Fittingly, the expiration of Trump's deadline falls on Easter Monday, a market holiday in Germany. The Frankfurt Stock Exchange will also remain closed on Good Friday.
As long as the Strait of Hormuz remains effectively blocked, investors are primarily concerned about further spikes in oil prices. High energy costs could dampen economic growth while simultaneously fueling inflation. Consequently, consumer price data from Germany and the Eurozone, due on Monday and Tuesday, will be particularly scrutinized. "Higher inflation figures for March may only be a foretaste of what looms in the coming weeks if the Iran or energy conflict persists," said Robert Greil, Chief Strategist at Merck Finck. He expects inflation to exceed three percent in the second quarter for the first time since 2023.
In the medium term, however, experts at Landesbank Hessen-Thueringen believe the Dax could emerge relatively unscathed. "We had already seen limited potential for equities in 2026 due to high valuations," argued Helaba currency strategist Samuel Will. He is maintaining his year-end target of 25,000 points for the German benchmark index. Despite the recent pullbacks, there is still no sign of panic in the equity markets. However, the Iran conflict is likely to persist for several more weeks, Will noted.
This further exacerbates uncertainty for German corporations. The upcoming first-quarter earnings season is therefore becoming a fundamental litmus test for sentiment, commented Robert Halver, Capital Market Strategist at Baader Bank. The focus will be on guidance and the extent to which rising energy-related cost pressures can be offset by productivity gains through the implementation of Artificial Intelligence. In the meantime, several laggards in the MDax and SDax are scheduled to release annual results throughout the week.
Friday also features the closely watched US labor market report, a key indicator for the Federal Reserve's future monetary policy. Due to rising inflationary risks, the Fed has recently adopted a more hawkish stance, wrote Soeren Wiedau of Weberbank. Interest rate cuts are only conceivable once inflation trends clearly back toward the target. In Europe, the probability of interest rate hikes has even increased./niw/tih/jha/
--- By Nicklas Wolf, dpa-AFX ---
