The German DAX index is projected to fall at the start of trading on Wednesday, with broker IG Markets estimating a pre-market drop of 0.8 percent to 25,781 points. This anticipated decline follows a session earlier in the week where the index closed 0.6 percent higher at 25,981 points, struggling to break through the psychological barrier of 26,000 points due to investor caution.
Salah-Eddine Bouhmidi, an expert at IG Markets, notes that investors currently lack the sustained conviction needed to push the index past this hurdle. He suggests that political clarity could provide the necessary impetus for a recovery, though geopolitical risks remain a significant source of uncertainty leading up to the US midterm elections.
The upcoming midterms are critical in determining whether Democrats can wrest control of Congress from President Donald Trump's Republican Party. Current polls indicate a likely Democratic victory in the House of Representatives, while the outcome in the Senate remains less certain. Many investors fear that the US might launch a new military attack on Iran following the elections, which could severely impact commodity markets and the global economy.
However, President Trump recently told reporters he does not plan an attack on Iran after the midterms, expressing belief that a deal with Tehran is possible. Thomas Altmann, a portfolio manager at QC Partners, acknowledged that while the threat of US military action has not been entirely eliminated, the probability of an immediate strike following the elections has significantly decreased.
Beyond geopolitical tensions, the earnings season continues to influence market movements, particularly regarding the viability of artificial intelligence investments. Investors are closely monitoring results from major US tech companies, with Apple releasing its quarterly figures after the US market closed on Monday.
Apple's report presented a mixed picture for shareholders. While iPhone sales and total company revenue reached record levels for a September quarter, resulting in more than $30 billion in net income, the stock market reacted negatively to the company's outlook for the current quarter. Investors appeared disappointed by the forward guidance despite the strong historical performance.
Data analytics firm Palantir also released its quarterly results, showing substantial growth. Revenue surged 96 percent year-over-year in the third quarter to $2.3 billion, while net profit increased by 49 percent to $1.13 billion. The company, which specializes in analyzing large datasets for government and military clients, saw its business with US government agencies grow by 96 percent to $953 million. Palantir's software is utilized by the Department of Homeland Security and the Pentagon, and media reports suggest it is also being used in the context of the conflict involving Iran.
Sources: Tagesschau.