Weekly Outlook: “Strong Start Fizzles Out”

Following last week’s sharp rebound, new threats from Donald Trump regarding the Iran conflict are causing uncertainty on the stock markets this morning. Meanwhile, technical analysts are warning of “long-term signs of a slowdown” for the DAX.

April 7, 2026. FRANKFURT (Deutsche Börse). Even a good five weeks after the first airstrikes by the U.S. and Israel on Iran, the military conflict remains the dominant theme on the stock markets. “Financial market participants are fully focused on the Iran war,” confirms Folker Hellmeyer, chief economist at Netfonds AG. With the latest ultimatum from the U.S. government, he believes the war is “heading toward a climax regarding the escalation of the past five weeks.”

At the start of the week, Donald Trump threatened to completely destroy Iranian power plants and bridges if Tehran did not open the Strait of Hormuz by Tuesday evening (2 a.m. Wednesday morning our time). “The entire country could be wiped out in one night, and that night could be tomorrow,” the U.S. president declared at a press conference at the White House. Iran subsequently referred to these as “baseless threats from a confused U.S. president who is stuck in a dead end.”

U.S. indices post gains at the start of the week

The positive momentum from the U.S. has thus already fizzled out again this morning. U.S. indices had posted gains on Easter Monday, thereby significantly boosting sentiment for the German stock market. This morning, however, the DAX (DE0008469008) is trading at around 23,100 points, slightly below its closing level from last Thursday (23,168 points). During the shortened pre-Easter week, the German benchmark index had gained 3.9 percent thanks to hopes that had briefly emerged for an imminent end to the war. The Stoxx Europe 600 (EU0009658202) gained 3.7 percent.

According to Ralf Umlauf of Helaba, there is “no basis for a sustained market recovery as long as the war continues and energy prices remain at their high levels.” The price of Brent crude is trading slightly higher again this morning at $111. Strategists at Commerzbank even consider “new highs” possible in the event of further escalations in the Middle East. And even if the conflict is resolved, damage to infrastructure, low inventories, and longer restart times could keep the oil price around $90. This is likely to further worsen the outlook for the global economy.

Inflation is already rising

The effects of higher energy prices on inflation are already evident, as Frank Klumpp of LBBW notes. Consumer prices in Germany, which rose sharply to 2.7 percent in March, are seen as a harbinger of the bad news that could hit the financial markets in the coming weeks. The main driver of the rise in inflation was the significant increase in fuel prices. For this reason, Deka’s economists also expect financial market analysts to revise their outlook on the economy downward once again.

LBBW nevertheless still expects the consequences of the war to be “over” by at least mid-2027, provided the Strait of Hormuz reopens by the end of April. However, if the conflict drags on even longer, the analyst believes there is a risk of a genuine supply crisis and a widespread surge in inflation. In this scenario, central banks would have to counteract it with interest rate hikes, which would create the risk of stagflation.

No “full-blown sell-off” yet

What does this mean for the stock markets? Commerzbank emphasizes that, despite the markets’ heavy reliance on news from the Middle East, there has been no “panic mode” or “full-blown sell-off” so far. At the same time, short-term sentiment is oversold, increasing the chances of a quick rebound if the outlook brightens in the near term. LBBW also considers the losses so far to be “moderate” given the looming energy crisis and points to the DAX’s greater sensitivity due to its energy dependence.

Helaba now sees the German stock index back in the “fair valuation range,” while the S&P 500 in the U.S. remains overvalued in its view. The Helaba BEST indicator is moving toward the “buy zone” but has not yet issued a signal. Markus Reinwand of Helaba Research also notes, from a technical analysis perspective, that the DAX remains “well below the key 200-day moving average.”

Sobering chart analyses

HSBC’s technical analysts used the long Easter weekend to conduct a long-term analysis of the DAX. The results are sobering. In addition to the break in the uptrend on the monthly chart—which had been in place since fall 2022—the technical analysts also point to new sell signals from key indicators, some of which are at all-time highs. In addition, the DAX’s monthly Heikin Ashi chart saw a color change in March. “A phenomenon that has regularly signaled a trend reversal in the past,” the analysts explain.

Key Economic and Business Dates for the Week

Tuesday, April 7

2:30 p.m. U.S.: Durable Goods Orders. Following unchanged order intake recently, analysts expect another increase for February. LBBW anticipates a 1.5 percent rise compared to the previous month, while Helaba forecasts slightly stronger growth of 2.0 percent. The report is considered a leading indicator of whether U.S. companies are once again placing more orders for capital goods.

Wednesday, April 8

8:00 p.m. U.S.: Fed minutes. The focus will be on how Fed officials assess the latest inflation risks—including against the backdrop of higher energy prices—and how united the committee is on the future path of interest rates. Commerzbank expects these minutes to provide clues as to how the various factions within the Fed are positioning themselves.

Thursday, April 9

2:30 p.m. U.S.: Personal consumption expenditure inflation data. The price index excluding energy and food (core rate) is of particular interest to the Federal Reserve. LBBW expects an annual rate of 3.1 percent for February, indicating no easing compared to the previous month. From the Fed’s perspective, this would mean that price pressures remain relatively high.

Friday, April 10

2:30 p.m. U.S.: Inflation data – consumer prices. A sharp month-over-month increase is expected for March, primarily due to significantly higher energy prices. Commerzbank forecasts a 0.9 percent increase from the previous month and a 3.3 percent increase from the previous year (up from 2.4 percent previously). Excluding energy and food (core rate), analysts see increases of 0.3 percent and 2.7 percent, respectively. Deka expects a particularly sharp price increase of over 10 percent month-over-month in the energy sector.

3:00 p.m. U.S.: University of Michigan Consumer Sentiment. According to LBBW’s assessment, sentiment is likely to continue to deteriorate in April, falling from 53.3 to 51.5 points. Higher energy prices are seen as a drag on consumer sentiment; the index is therefore also monitored as an indicator of short-term consumer momentum.