EU stock markets amid a thaw in US-Iran relations and a fresh fall in chip prices: Milan up 0.5 per cent, Wall Street closes lower. Crude oil slips to $90

US stock markets have just come off the back of another week of losses (the second in a row for the S&P and the Nasdaq, and the third for the Dow Jones).

This week, traders are keeping an eye on the earnings reports from many major companies ( Apple, Amazon, Meta Platforms and Microsoft Corp, amongst others), and a Fed meeting on interest rates (on Wednesday) with an uncertain outcome. The general consensus is that the central bank will raise rates in September, but the markets are also pricing in the possibility that the Fed will increase the benchmark rate by 25 basis points as early as this week: a probability of 33.7 per cent according to the CME Group’s FedWatch Tool.

On the stock market, Quantum Computing rose by more than 8% after the company announced a partnership with At&T, to utilise its quantum computers and bolster the telecoms giant’s efforts in AI. In this regard, according to the Wall Street Journal,  Nvidia is reportedly in talks with OpenAI for funding of around 250 billion dollars for a large-scale data centre project, fuelling fears of overspending on the new technology.

Turning to the equity market, on the Milan Stock Exchange the fall in crude oil prices is weighing on oil companies, particularly Eni (-2.4%) and Tenaris (-2.8%). There was less selling pressure on Saipem (-1.1%), which has been awarded two new contracts by Eni in Italia and the Ivory Coast worth around 800 million. On the other hand, Ferrari (+4.3%) and Amplifon (+2.6%) performed well; Amplifon, which had failed to find a price at the start of trading, went on to gain over 4 per cent, buoyed by a recommendation from JPMorgan. There was also buying interest in Buzzi (+2.8 per cent), which is benefiting from the prospects of reconstruction in the Middle East, and in Cucinelli (+2.4 per cent), ahead of indications regarding the luxury sector due to be released this evening in LVMH’s results (+1 per cent in Paris).

The focus also remains on the risk scenario, with an article in Sunday’s Sole 24 Ore, written by editor-in-chief Fabio Tamburini, which outlines the various options being considered by Banco BPM (+0.8%) and MPS (+1.3%) for a merger. Among other key players in the Italian banking sector, there were buying trades in Intesa (+1%) and Generali (+1.6%), whilst UniCredit (+1.6%) was buoyed by reports from Morgan Stanley and JPMorgan. Furthermore, Jens Weidmann, chairman of Commerzbank (+2.1% in Frankfurt), has called on the management at Piazza Gae Auelenti to enter into talks regarding a possible merger. Finally, the tech sector was weak, with St (-1.9%) and Prysmian (-3.8%) following Wall Street’s lead.

On the foreign exchange market, the euro closed at around 1.137 dollars (down from 1.1388 at Friday’s close), having fluctuated after once again breaching the 1.14-dollar mark during the day; the single currency is also worth 186.1 yen (down from 186.4), whilst the dollar-yen exchange rate stands at 163.6 (down from 163.7). Gold is trading not far from $4,100 an ounce in the spot market; bitcoin is relatively stable, hovering around the $65,000 mark.

The spread between BTPs and Bunds closed lower. At the close of trading, the yield spread between German and Italian 10-year bonds stood at 81 basis points, down from the 82 basis points recorded on Friday. The yield on the Italia 10-year benchmark bond also fell, ending the session at 3.93 per cent – down 6 basis points from Friday’s closing yield of 3.99 per cent – on a day when yields on all Eurozone bonds fell.