For a long time, enthusiasm for AI dominated the scene, but now the mood has turned more subdued. Once again, the reason is the conflict in the Middle East. This week, all eyes are on Nvidia, the last of the Magnificent 7 to report its earnings.May 18, 2026. FRANKFURT (Deutsche Börse). A lack of progress in Middle East negotiations, high oil prices, and concerns over interest rate hikes are weighing on the markets. “Toward the end of the week, rising interest rate concerns in the U.S. were a major topic,” explains Helaba analyst Ralf Umlauf. Since there are still no signs of easing tensions in the Strait of Hormuz or on the energy markets, there is strong evidence pointing to higher key interest rates. These could weigh on the economy.Added to this are weak economic data from China released this morning, specifically figures on industrial production and retail sales that fell short of expectations. The DAX (<DE0008469008>) stands at 23,614 points on Monday morning, down from 23,906 at Friday’s close. The Stoxx Europe 600 (<EU0009658202>) is also down. In the U.S., the S&P 500 and Nasdaq (<US6311011026>) had reached new all-time highs on Thursday, but fell on Friday. The price of Brent crude is now back at $110 per barrel.“Bond Markets in a Perfect Storm”Even more so than stock markets, bond markets are signaling risks: The yield on 10-year German government bonds stands at just under 3.2 percent, its highest level since 2011. The yield on 10-year Japanese government bonds has risen to 2.8 percent, a level last seen in October 1996. “Bonds remain in the perfect storm,” comments Leon Ferdinand Bost of Metzler. On the one hand, the ongoing closure of the Strait of Hormuz is fueling inflation fears. On the other hand, it is heightening concerns that already highly indebted countries will take on even more debt.“AI Is a Bet on the Future”The question of whether there is an AI bubble also remains open. According to Dirk Schlüter of the investment firm DWS, there is no clear-cut answer. “A key difference from the dot-com bubble era is the significantly higher corporate profitability we see today,” he explains. On the other hand, corporate revenue growth is a concern. Back then, revenues kept pace with investments. Today, however, they have risen by only 10 percent on average. “What we’re seeing right now is a bet on the future,” says Schlüter.According to Schlüter, much in Germany depends on the Middle East conflict. Germany is particularly hard hit by this in Europe—and the DAX has performed correspondingly weakly this year. “Should a lasting easing of tensions emerge, the DAX is likely to have considerable potential to catch up.”“Mixed Outlook for Europe, but Not Unattractive”According to Sören Wiedau of Weber Bank, Europe presents a mixed picture, but one that is by no means unattractive. Valuations are more favorable compared to the U.S., thereby creating a solid foundation. While higher energy prices and a subdued economy are currently dampening momentum, this very environment opens up room for positive surprises. “Overall, we believe the environment for stocks remains favorable,” he concludes.Nvidia Earnings: “Outlook Will Be Decisive”Earnings season is drawing to a close, with only a few companies left to report first-quarter results. However, Ulrich Kater of DekaBank expects an important reality check this week: On Wednesday, Nvidia—currently by far the most valuable company in the world—will report its earnings. “The outlook, in particular, will be decisive.”In addition, the date for a potential record-breaking IPO has now been set: Elon Musk plans to take his space company SpaceX public on June 12. According to the Wall Street Journal, the offering could raise up to $80 billion—more than ever before.Key Economic DataMonday, May 18G7 Meeting (through Tuesday). The finance ministers of the G7 countries are meeting; topics include the economic consequences of the Middle East conflict.Wednesday, May 208:00 p.m. U.S.: Minutes of the latest Federal Reserve meeting. Since the last Fed meeting saw more dissenting views from the majority opinion than at any time in over 20 years, the minutes are likely to shed some more light on the internal discussions, explains Metzler Research.Thursday, May 2110:00 a.m. Eurozone: Purchasing Managers’ Index (PMI) for May. According to DekaBank, the conflict in the Middle East remains the dominant issue. Only with substantial progress toward resolving the conflict and a noticeable easing of energy prices will sentiment among companies improve sustainably again. The bank forecasts 48.7 points, down from 48.8 the previous month.Friday, May 2210:00 a.m. Germany: ifo Business Climate Index for May. Commerzbank expects the ifo Business Climate Index to have deteriorated further in light of the ongoing blockade of the Strait of Hormuz. The decline is likely to be primarily attributable once again to a more pessimistic outlook for the future.By Anna-Maria Borse, May 18, 2026, © Deutsche Börse AG About the Author Anna-Maria Borse is a finance and business editor specializing in financial markets, the stock market, and economic issues.Please send feedback and questions to live@deutsche-boerse.com