Sky-high crude oil prices send stock markets into the red. Milan limits the damage (-0.6 per cent) thanks to Eni

(Il Sole 24 Ore Radiocor) - The rise in oil prices continues, dragging down global share markets: the European indices closed down by more than 1.5 per cent, whilst in Milan the FTSE MIB managed to hold its ground thanks to Eni’s performance and closed at 51,875 points. The latest escalation in the Middle East has pushed crude oil prices higher once again, bringing Brent back above the $100 per barrel mark, at its highest level since last July (Brent futures up 3.45% at 101.31, WTI up 3.7% at 96.51), further fuelling fears over the trend in inflation. European gas prices also soared, exceeding the 80-euro-per-MWh mark in Amsterdam for the first time since the start of 2023 (+4.6% to 79.36 euros at close). With prices under pressure, all eyes are now on the decisions the ECB is set to announce tomorrow: the market is already pricing in a 25 basis point rise in the cost of borrowing, which will take rates to 2.5 per cent, but the focus will be primarily on President Christine Lagarde’s remarks and any possible indications for the future. Next week, then, it will be the turn of the Fed and the Bank of Japan, and here too, expectations are for the central banks to take restrictive measures. This situation is keeping government bond yields high: the yield on the 10-year Bund has exceeded 3.43 per cent, whilst that on the Italian BTP has reached 4.27 per cent.

Meanwhile, yields on US government bonds have reached 4.85 per cent, their highest level since November 2023, driven by inflation fears and despite the government’s latest intervention in the market. A short while ago, the US Treasury announced that it would buy back $6 billion of long-term government debt. Wall Street closed lower due to the continued rise in oil prices. Prices have risen due to the escalation of tensions between the US and Iran, which is fuelling fears of further disruptions to energy supplies in the Middle East. The Dow Jones fell by 0.77 per cent to 52,381.08 points, the Nasdaq dropped by 0.64 per cent to 26,253.34 points, whilst the S&P 500 fell by 0.48 per cent to 7,636.49 points.

Among the leading stocks on the Milan stock exchange, at the close of trading, high oil prices continued to buoy energy shares, led by Eni. Attention remains focused on the banks, which are generally down, on the eve of the AGM of Intesa Sanpaolo which is set to give the green light to the capital operation in support of the takeover bid for Banca Monte Paschi Siena. As for the Siena-based bank, non-executive directors Gianluca Brancadoro and Alessandro Caltagirone have been co-opted onto the board. All eyes are also on the tech sector and STMicroelectronics, on the day Apple is set to unveil its new foldable iPhone. Finally, Telecom Italia is under close scrutiny during the final days of the takeover bid launched by Poste Italiane , following the upward revision of the cash price per share. Outside the main index, Webuild, which, however, has described press reports regarding a request to the Government for 22 billion to cover additional costs as ‘entirely without foundation’. The company also clarified that the communications sent to the relevant authorities concern contractual obligations that have already fallen due.

The spread between BTPs and Bunds against a backdrop of a general rise in yields across the euro yield curve due to worsening inflation expectations. At the close of trading, the yield spread between the benchmark 10-year BTp and the German Bund of the same maturity stood at 84 basis points, up from 81 basis points at yesterday’s close. The rise in the yield on the benchmark 10-year BTP was significantly sharper, closing at 4.28 per cent, up from 4.17 per cent in the previous session.

On the foreign exchange market, finally, the euro/dollar remains flat at 1.1626 dollars (down from 1.163 yesterday), whilst the euro/yen stands at 178.74 (179.33). The dollar/yen rate has fallen to 153.76 (154.2). Gold is up, with the spot price at $4,390 per ounce (+0.85 per cent), whilst bitcoin stands at $78,659 (-0.4 per cent).