DAX Faces Tough Trading Week: ECB Interest Rate Decision and Iran War in Focus

The conflict in the Middle East has intensified significantly in recent days. Over the weekend, an Iranian Revolutionary Guard rocket attack on an air force base in Jordan claimed the lives of US soldiers for the first time in months. At the same time, the US military bombed targets in Iran from Saturday to Sunday in the eighth consecutive night. Iranian forces concentrated on US bases in the Gulf states of Kuwait and Bahrain, as well as in Jordan, located roughly 1,000 kilometers away.

Escalation in the Middle East and the Consequences for the Oil Market

The situation in the Strait of Hormuz, which is important for global energy trade, remains tense. According to financial data provider LSEG, only four ships passed through the strait on Sunday, compared to eight on Saturday. AktivTrades analyst Frank Sohlleder criticized: "Die USA scheiterten daran, die Meerenge verlässlich abzusichern". A barrel of North Sea Brent crude for delivery in September subsequently rose 2.72 percent to $90.50, reaching its highest level since June. US West Texas Intermediate crude rose 2.39 percent to $84.46 per barrel.

Shane Oliver, chief strategist at asset manager AMP, warned of the possible consequences: "Je länger die Meerenge geschlossen bleibt und der Krieg eskaliert, desto größer ist das Risiko, dass die Ölpreise auf etwa 150 Dollar je Barrel steigen müssten, damit sich die Nachfrage an das geringere Angebot anpasst". Investment strategist Mark Dowding of RBC BlueBay Asset Management warned: "Ohne einen Kompromiss könnte ein Krieg ohne klares Ende und ohne Ausweg drohen".

ECB Faces Difficult Interest Rate Decision

The focus of the trading week is the European Central Bank's interest rate decision on Thursday. The current key interest rate stands at 2.25 percent. Alexander Raviol of asset manager Lupus Alpha expects a rate pause: "Sie bewegt sich auf einem schmalen Grat zwischen Inflationsrisiken und Wachstumssorgen" and added: "Höhere Energiepreise treiben die Inflation und würgen zugleich die ohnehin schwache Konjunktur weiter ab". Robert Greil of the private bank Merck Finck also sees the ECB under pressure: If oil prices continue to rise, it will "kaum um eine zweite Zinserhöhung in diesem Jahr herumkommen".

The ECB had raised rates in June when a de-escalation in the Iran war seemed within reach. That hope has since been dashed. In June, German producer prices fell 0.3 percent compared to the previous month, but rose 1.8 percent year-on-year.

Corporate Earnings and Economic Data in Focus

In addition to monetary policy, numerous corporate earnings are on the agenda. Mid-week, investors will be awaiting the quarterly reports of Google parent Alphabet and electric car maker Tesla, which will be released after the close of trading in New York. Sören Wiedau of Weberbank cautioned: "Die milliardenschweren KI-Investitionen müssen sich zunehmend in höheren Umsätzen, Margen und Gewinnen niederschlagen". In Germany, three DAX companies — Deutsche Börse, software group SAP, and Volkswagen — will release figures over the course of the week. They will be joined by a number of second- and third-tier names such as lab and pharmaceutical supplier Sartorius vz, rail technology group Vossloh, and laser specialist LPKF LaserElectronics.

On Tuesday, the ZEW economic expectations are also likely to attract attention. The experts at Landesbank Hessen-Thüringen (Helaba) expect a slightly positive development. They see the indicator for the manufacturing sector in a long-term upward trend above the expansion threshold. On Friday, alongside German consumer sentiment, preliminary purchasing managers' indices for July are also on the agenda.

Losses Also on US Stock Markets

Sentiment on US stock markets was also subdued on Friday. The Dow Jones index of blue-chip stocks closed 0.8 percent lower at 52,146 points. The broader S&P 500 lost one percent to 7,457 points. The technology-heavy Nasdaq index shed 1.4 percent to 25,520 points. Consorsbank market analyst Jochen Stanzl warned of contagion effects: "Je stärker die Kurse fallen, desto größer wird der Zwang, ausufernde Verluste bei Technologie-Aktien durch den Verkauf anderer Werte auszugleichen".

Sports equipment maker Adidas has also been doing well recently: The DAX company sold four times as many jerseys during the FIFA World Cup as in the previous tournament, with ball sales doubling. Adidas CEO Björn Gulden now expects World Cup-related revenues of around 1.5 billion euros. Tesla, meanwhile, according to the 2025 annual report of Tesla Manufacturing Brandenburg SE, is planning a significantly higher production volume at its Grünheide site for the 2026 financial year. SpaceX, which lost around 100 billion dollars in market value following the previous test abort, is meanwhile planning a new Starship launch attempt next Thursday.

Thomas Altmann of QC Partners meanwhile sees an increasing willingness to sell: "Gewinnmitnahmen kommen gerade in Mode". While panic is not yet observable, the readiness to sell is rising. The Iran war remains the dominant risk for the financial markets, according to Emden.