DAX extends recovery – US–Iran conflict eases slightly, macro data and inflation in focus

DAX continues upward trend

The German equity benchmark extended its recent recovery, supported by improving market sentiment. Investors are gradually returning to risk assets following a period of heightened volatility.

Geopolitics remain a key driver

Developments in the Middle East continue to influence market direction. However, signs of easing tensions between the United States and Iran are helping to stabilise sentiment and reduce immediate downside risks.

A potential diplomatic solution is being discussed, although uncertainty remains around whether negotiations will lead to a lasting resolution.

Oil prices and market sentiment stabilise

Energy markets are closely linked to geopolitical developments. A stabilisation in oil prices, supported by expectations of reduced supply disruption, is contributing to the improved outlook for equities.

Lower volatility in energy markets is easing inflation concerns slightly, which in turn supports equity valuations.

Focus shifts to macroeconomic data

With geopolitical risks temporarily receding, investor focus is shifting back to economic fundamentals. Key data releases, including business sentiment indicators and US import prices, are expected to provide further direction.

Inflation remains a central theme, as elevated price pressures continue to influence central bank expectations and interest rate trajectories.

Inflation and central banks in focus

Markets remain sensitive to inflation developments, particularly in the context of energy prices and global supply chains. Central bank policy expectations will be shaped by incoming data, with any surprises likely to trigger market volatility.