(Update: incorporating various weekend events)

FRANKFURT (dpa-AFX) - Following the DAX recovery of recent days, the index's trajectory in the coming week remains uncertain. On Friday, statements from the Iranian Foreign Minister suggesting that passage through the Strait of Hormuz was now open to all commercial vessels had sparked euphoria. The strait is a vital trade route for the global economy, which had recently been largely blocked due to the Iran conflict.

However, Iran later closed the strait again. Tehran justified the move by citing the US blockade of Iranian ports and vessels attempting to depart from or dock at them. US President Donald Trump, for his part, accused Iran of a blatant violation of the ceasefire agreement.

Conflicting reports also emerged regarding a potential second round of negotiations between the US and Tehran. Shortly before the ceasefire in the Iran conflict was set to expire on Wednesday, Trump announced his readiness for new talks. His representatives would be in the Pakistani capital, Islamabad, on Monday evening, Trump wrote on the Truth Social platform without specifying a time zone. However, according to the semi-official Tasnim news agency, Iran will not participate in negotiations as long as the US maritime blockade persists.

On Sunday, the DAX indicator calculated by IG pointed toward losses. However, these remained within a manageable range compared to the significant volatility seen recently.

"Traffic lights are back to green on other trading floors as well, after Donald Trump raised hopes for an agreement with Iran," equity strategist Frank Klumpp from Landesbank Baden-Wuerttemberg (LBBW) wrote on Friday. He noted that the rally in the US was particularly impressive, with records for the broad-market S&P 500 and the tech-heavy Nasdaq 100. Both indices have now more than recouped their losses since the start of the conflict in late February.

The Japanese Nikkei 225 also recently hit a record high. In contrast, the German benchmark index still has some ground to cover. However, the technical picture has brightened significantly since it managed to climb back above the 100-day and 200-day moving averages, which are key indicators for the medium- to long-term trend.

Meanwhile, Klumpp warns against excessive expectations, noting that "current prices already reflect a great deal of advance praise." The economic impact of the Iran conflict remains difficult to quantify, and the situation in the oil markets remains tense.

Experts at Landesbank Helaba pointed out that while equity prices declined visibly at the start of the conflict in late February, the drop was not as severe as in previous crises. "Panic was never detectable in classic fear indicators such as implicit equity volatility," they emphasized. Apparently, the recent signals of de-escalation were enough for many investors to re-enter the market at slightly lower valuation levels.

Since an optimistic Middle East scenario appears already priced in, "a certain potential for disappointment is building up for the coming weeks," Helaba's weekly outlook continued on Friday. Since the start of the conflict, glimmers of hope have repeatedly been followed by setbacks, suggesting that "the path to a lasting peace settlement is likely to be rocky."

Ulrich Kater, Chief Economist at Dekabank, struck a similar chord. While he sees progress in talks, particularly between US ally Israel and Lebanon—from where the Iran-aligned Hezbollah militia operates—he cautioned: "Beyond the US President's announcements and commentary, no concrete results are yet on the table."

According to market analyst Timo Emden, the German stock market remains "remarkably resilient" to the ongoing Middle East conflict. Investors are betting that the ceasefire between the US and Iran will hold for now and "could lead to a sustainable peace agreement in the medium term." This supports "the risk appetite of many investors, who are currently tuning out geopolitical risks rather than pricing them in anew."

In addition to these uncertainties, Helaba notes that the high valuation of many equity indices also limits further upside potential. Against this backdrop, the upcoming quarterly reporting season is moving back into sharper focus for investors.

At the start of the new week, the German corporate agenda remains largely empty. On Tuesday, consumer goods group Beiersdorf will provide an update on its sales performance, followed the next day by the interim report from online broker Flatexdegiro. From the US, Airbus rival Boeing and, after the New York close, electric vehicle manufacturer Tesla will publish financial results.

Thursday will see reports from laboratory and pharma supplier Sartorius, headlight manufacturer Hella, rail technology group Vossloh, and, late in the evening, software maker SAP. The round of earnings will conclude on Friday with Atoss Software.

According to Dekabank economist Kater, potentially market-moving economic data is likely to remain overshadowed by developments in the Middle East. Sentiment indicators from Germany should "provide insight into whether companies view the situation as optimistically as financial market participants." The ZEW economic sentiment index is due on Tuesday, followed by S&P Global PMI data on Thursday and the Ifo Business Climate index on Friday./gl/ajx/he

--- By Gerold Loehle, dpa-AFX and Stefan Heider, dpa-AFX ---