Fears over interest rates are weighing on the stock markets. Milan (-0.1 per cent) holds its ground thanks to the defence sector. Oil up 6.7 per cent on Wall Street

(Il Sole 24 Ore Radiocor) – A subdued trading session for European stock markets and beyond, following an ECB rate hike – already priced in – which opens the door to a possible phase of further increases. Milan held its ground and closed close to parity (FTSE MIB -0.13% at 51,807 points), whilst almost all other European markets were in the red: Paris -0.5% and Frankfurt -0.7%. The price of oil has soared to record levels once again, with the war in the Middle East showing no sign of ending (according to the Wall Street Journal, it could even drag on beyond the inauguration of the next president) and attacks on oil tankers intensifying. TheBrent for November has thus reached the $105 per barrel mark, its highest level since last May, whilst US WTI has also returned to above the $100 mark.

The ECB, as widely expected, has raised the cost of borrowing by 25 basis points, bringing the key interest rate to 2.5 per cent. “The outlook remains highly uncertain, with upside risks to inflation and downside risks to economic growth,” said ECB President Christine Lagarde at a press conference. “This rate rise is not simply a precautionary measure. In this context, the ECB may have to move into restrictive territory and, at this stage, cannot rule out further rate rises,” argues Sylvain Broyer of S&P Global Ratings.

Wall Street closes lower. The Dow Jones falls by 0.60 per cent to 52,064.46 points, the Nasdaq drops by 0.65 per cent to 26,081.73 points, whilst the S&P 500 falls by 0.58 per cent to 7,591.79 points. Oil closes sharply higher: up 6.69 per cent at $102.48 per barrel.
Traders are turning their attention to the day’s other market mover, the data on US producer prices for August, which rose by 0.4 per cent month-on-month and increased to 5.4 per cent year-on-year, still well above the Fed’s 2 per cent inflation target and higher than expected. A figure “particularly influential ahead of Friday’s consumer price data, as certain components feed directly into the PCE deflator”, note analysts at MPS. And as Fed member Waller recently emphasised, this week’s inflation data will be decisive for the outcome of the Fed’s meeting on 16 September. At present, forecasts put the probability of a 25-basis-point rate hike at 67%. In the equity market, chip stocks are under pressure; among others, the performance of Nvidia Corp and Intel.

On the Milan stock exchange, all eyes remain on the banking sector on the day of Intesa’s AGM (+0.1%), which gave the green light to the capital increase to fund the voluntary public exchange offer for MPS (+0.5%). The Siena-based bank announced that it had filed with Consob the documents relating to the voluntary public exchange offer for BPM (-0.1%) and those relating to the public tender offer for Generali (+0.5%).

Lottomatica rallied (+5.4%), finishing top of the index, whilst the defence sector recovered with Fincantieri (+1.14%) and, above all, Leonardo (+2.8%), following the sector’s weakness the previous day and an upgrade from BNP Paribas. Among the top performers were also Inwit (+2.2%) and Ferrari (+1.5%). Bringing up the rear were luxury stocks, with Moncler (-3.4%) and Cucinelli (-2.6%), and tech stocks, with ST (-2%) and Prysmian (-2.6%). There was little movement in Tim (-0.6%) and Poste (-0.3%), on the eve of the expiry of the public takeover bid launched for the telecoms group.