The DAX is down 0.3 percent at the start of the week, falling to 24,274 points. Last Friday, the German benchmark index closed down 1.3 percent at 24,338 points. Uncertainty in the Middle East, particularly the failed peace negotiations, is causing nervousness among investors.
U.S. Donald Trump rejected the Iranian response to a U.S. peace proposal as unacceptable on Sunday. Thomas Altmann, portfolio manager at QC Partners, commented on the market situation: "The markets had priced in a quick peace. Now that quick peace is being priced out again." This development fuels concerns about a resurgence of war.
Helaba emphasizes in a daily commentary that hopes for a swift resolution to the Middle East conflict were dashed by the end of last week. The continued naval blockade in the Strait of Hormuz contributes to the tense situation. Jochen Stanzl, chief market analyst at Consorsbank, notes that it remains unclear how the maximum demands of both sides can be reconciled.
In this context, investors are hopeful for Trump's upcoming state visit to China, scheduled from Wednesday to Friday. Ulrich Stephan, chief investment strategist at Deutsche Bank, describes the interests at play: "China is interested in easing U.S. export restrictions on high-tech semiconductors, while the U.S. seeks relief from Chinese export controls on rare earths." Both sides have a clear interest in maintaining the 'tariff peace' established until November.
Oil prices are rising in response to Trump's statements. Both North Sea Brent and U.S. light crude WTI are significantly more expensive. Bruce Kasman, chief economist at JPMorgan, warns: "The risk of a stronger price movement increases with each week that the Strait of Hormuz remains closed."
