EU stock markets weighed down by bond yields; the spread soars. Wall Street rises, buoyed by tech shares

(Il Sole 24 Ore Radiocor) – Soaring bond yields, tensions over oil and fears of rising inflation continue to keep European stock markets at the start of October, following the difficulties already encountered in September. The euro yield curve continues to shift upwards, whilst rates and spreads are returning to levels not seen for some time. In the United States, the 10-year Treasury yield has risen to 5.342 per cent, surpassing the previous peak set in 2007 and reaching its highest level since early 2002. The driving force behind this shift is the shock currently affecting the energy markets following the crisis triggered by transit difficulties in the Strait of Hormuz, as we enter the eighth month of hostilities between the US and Iran. Expectations of persistently high inflation are also fuelling speculation about further interest rate hikes by the ECB and the Fed. For the US central bank, however, expectations of a rate rise in October have diminished following better-than-expected inflation figures for August. According to the CME FedWatch, the probability indicated by market participants has fallen to 37 per cent (from 71 per cent a week earlier).

Volatility continues to prevail in the energy sector. Encouraging signs regarding crude oil flows from the Persian Gulf – which are reported to have returned to levels close to those seen before the conflict over the past week – pushed oil prices down, with Brent falling by more than 6 per cent to below $98 a barrel at the start of the day. However, the trend then reversed and the price rebounded above $100 a barrel, down by around 3 per cent. WTI, on the other hand, continued its upward trajectory. Meanwhile, according to the FT, US President Donald Trump is reportedly insisting on a controversial ban on the export of American diesel, intended to cool prices ahead of the mid-term elections.

In this scenario, all the major European stock markets are suffering: Milan (FTSE MIB ), Paris (CAC 40 ), Frankfurt (DAX 40 ), Madrid (IBEX 35 ) and London (FTSE 100 ).

Indices are rising on Wall Street, despite the latest rise in US Treasury yields and oil prices. Micron has reported exceptional profits, with turnover quadrupling in the last quarter. The results appear to have boosted other chipmakers and artificial intelligence-related companies more than Micron itself: Nvidia, AMD and Broadcom, for example, are trading higher in pre-market trading. Alphabet is also contributing to the bullish sentiment, having unveiled its latest artificial intelligence model, Gemini 4 Argon. The new model offers improvements in cybersecurity, programming and complex professional tasks, Alphabet said. Meanwhile, the yield on 10-year US Treasury bonds has settled near its highest level since 2002, as has that of 30-year bonds.

On the Milan Stock Exchange, leading the way is Fincantieri , buoyed by the positive outlook for defence spending following the initial publication of the European Defence Agency’s report. Stmicroelectronics and Technoprobe are weakening following the rally of recent days. On the rise: Prysmian is on the rise, with DB analysts forecasting a ‘solid’ quarterly result, driven by the data centre cable business. Well positioned Campari is well positioned following BofA’s upgrade to “buy”. Banking shares are down: ahead of the major shareholders’ meeting on 29 October, Banca Monte Paschi Siena clarifies that approval of the two public offers on Banco Bpm and Banca Generali will be separated from the acquisition of 13.3% of Generali as part of Mediobanca , whose merger would – if approved – guarantee an extraordinary distribution to shareholders that would leave the bank with 8.8 per cent of Generali’s share capital. Meanwhile, according to the German media, after around two years of opposition, the trade unions at Commerzbank have reportedly signalled toUnicredit that they were willing to cooperate. Bringing up the rear is Telecom Italia and Telecom Italia and https://vwd-proxy.ilsole24ore.com/FinanzaMercati/api/TickerInfo/Redirect/PST.MI" title="PST.MI-Poste Italiane" data-ticker="PST.MI" target="_blank">Poste Italiane, now grappling with the race to realise synergies following the conclusion of the takeover bid.