• • A double-digit profit gain on the US technology exchange Nasdaq in the current year versus a zero-round for the German benchmark index Dax: The stock markets make it very easy to see who is currently suffering particularly from the consequences of the Middle East conflict.
  • The fact that US stock markets appear so resilient is for good reason. "The earnings development of US companies in the first quarter turned out surprisingly well," says Chief Investment Officer Vincenzo Vedda. The markets currently assume that this could continue. Price drivers in the USA are old acquaintances.
  • "The never-ending boom in investments in Artificial Intelligence is currently the main driver for the good price development in the US," says Vedda. Europe, on the other hand, is much more severely affected by the consequences of the Iran war, especially regarding the supply side.
  • "We have therefore downgraded Europe to neutral and upgraded the US to neutral," says Vedda. In addition to a better earnings outlook, US equities received additional tailwinds from potential interest rate cuts by the US Federal Reserve, even if these might not occur until 2027. In the Eurozone, however, interest rate hikes are now more likely.
  • However, the confidence is not completely unclouded. This is evident in bonds, which have suffered significantly more from the Middle East conflict than equities – yields have risen sharply, and prices have fallen accordingly. Should yields remain this high, it could put the high valuations on the stock markets under pressure.
  • "Another risk factor is energy prices. 'They are likely to remain high, as more than ten percent of global oil production continues to be unavailable to the market,' says Vedda. Additionally, refinery capacity has decreased."

Topics driving capital markets 

Economic growth: Growth in industrialized countries is likely to slow down, but not in China

• In the US, growth is likely to slow down somewhat in the current year due to higher energy prices. In contrast, investments and consumption provide support.
• In Europe, higher energy prices are impacting demand. Unlike in industrialized nations, growth in China is likely to pick up slightly.

Inflation: Higher energy costs are price drivers in the US and in Europe

• The higher energy prices have also been reflected in a rising inflation rate in the US – most recently it stood at 3.5 percent. In the year 2026, inflation rates are likely to remain high at 3.2 percent.
• The cost of living in Germany rose by 2.9 percent in April (March: 2.7 percent). The main drivers were energy prices, which increased by 10.1 percent. How the inflation rate develops from here depends crucially on whether and when the Strait of Hormuz is reopened.

Central banks: The US and Europe likely on different interest rate paths in the future

• The US Federal Reserve left key interest rates unchanged in the range between 3.5 and 3.75 percent at its meeting at the end of April. Falling interest rates and rising inflation do not go together.
• The European Central Bank also did not adjust interest rates at its last meeting. Unlike in the US, however, we expect an interest rate hike in the coming months.

Risks: Further rising oil prices, inflation, and bond yields

• Should the oil price trade above 110 dollars per barrel for a prolonged period, this could force central banks into a more restrictive monetary policy, even in the face of slowing growth.
• Further rising yields on the bond markets could put the high valuations on the stock markets under pressure.