Stock markets under pressure from the tech sector and crude oil at $90; Eni stands out in Milan (-0.5%)

(Il Sole 24 Ore Radiocor) - The European stock markets closed lower in a session once again marked by the oil rally and the tech sell-off, which first paralysed the Asian markets before spreading once more to Europe and Wall Street. Thus, Milan closed down 0.49% at 51,443 points, despite a sharp rise in Eni and in line with much of the rest of Europe (Paris down 0.6%, Madrid down 1.6%). Frankfurt remained broadly stable, whilst London (+0.3%) bucked the trend to hit a new intraday all-time high of 10,951 points, aided by its relatively low exposure to technology stocks.

Meanwhile, the Fed’s guidance on interest rates is expected this evening, whilst fears are mounting over a further escalation in the Middle East. The renewed rise in crude oil (September Brent at around $90, WTI at $85) follows in the wake of fresh Iranian attacks on US forces. “We will strike Iran hard, in response to the attacks” by Tehran “against US targets in Jordan”, US President Donald Trump told Fox News. Further sell-offs in Asia this morning (Kospi -6%, Nikkei -1.5%), where record quarterly results from South Korean giant SK Hynix were not enough to reassure investors about the outlook for AI investments (-10.6% for the stock in Seoul). All eyes are also on tonight’s quarterly results from Microsoft and Meta.

Wall Street indices are in the red, due to the rally in oil prices and ahead of the Federal Reserve’s interest rate decision. Also dominating the headlines is the aforementioned anticipation surrounding the financial results of certain big tech firms. Particular attention is focused on the chip sector, which has seen four consecutive sessions of decline. Among others, the following remain under scrutiny at present: Nvidia Corp, Micron Technology and Intel. In recent trading sessions, concerns have grown over the return on substantial investments in AI, alongside fears of increased competition from China.

All eyes are also on the Fed, which is due to decide on interest rates this evening. “We do not expect a change in the federal funds rate this week, though we recognise that the situation is delicately balanced”, explains John Velis of BNY, adding that “should the FOMC proceed with a tightening, we can expect one or two dissenting votes in favour of maintaining the current level of rates”. According to the CME FedWatch, however, the probability of no change remains at 64.2 per cent. The consensus suggests a possible 25-basis-point rise in September.

On the European stock markets, as on the Milan Stock Exchange, quarterly results are dominating the headlines: in Milan, Eni (+7.1%) bolstered the market after doubling its profits in the second quarter and revising its guidance upwards, whilst announcing that a decision on an extraordinary dividend would be made in October. Moncler is up (+1.8%) in a mixed environment for the luxury sector (Cucinelli down 1.7%), whilst the market is reacting positively in Paris to Kering’s results (+15.7%), but is also digesting the lack of recovery in China highlighted by Hermès’ results (-11.7%). Nexi is also trading well (+3.4%) following the earnings season, which tomorrow will see Stellantis (+4.2%) among the key players. There were further profit-taking moves on St (-3.5%), whilst Lottomatica (-4%) and Italgas (-4.5%) slipped to the bottom of the table. Intesa was largely unchanged (-0.4%) following its results, whilst off the main index, quarterly results are driving Brembo higher (+6.4%).