Stock markets in the red, fresh turmoil on the bond market. Milan falls back below 50,000 points

(Il Sole 24 Ore Radiocor) - European stock markets European stock markets, hit on several fronts by rising oil prices, rising bond yields and the euro falling to its lowest level against the dollar since May 2025. Crude oil has resumed its upward trend, partly due to tensions in the Middle East, with new attacks on Saudi infrastructure by Yemeni Houthi rebels, and attacks on ships in the Strait of Hormuz. This tension is reflected in the bond market, where yields are still rising: the Italian BTP at 4.66 per cent (spread at around 115 basis points); the French OAT at 4.9 per cent (in this case, the spread against the Bund is around 139 basis points, given concerns over public finances and the upcoming elections). Consequently, Milan is trading in the red (FTSE MIB), much like Paris (CAC 40) and Frankfurt (DAX 40). Meanwhile, recent weak macroeconomic data for the US economy has dampened expectations of a rate rise in October, but the market still expects an increase by December with around 86 per cent probability, according to the CME FedWatch. In Europe, it is worth noting the better-than-expected German industrial production figures, up 2 per cent in August against estimates of 0.5 per cent.

Stock indices on Wall Street are falling, the day after the S&P 500 hit a new record high, weighed down by rises in crude oil prices and Treasury yields. US WTI crude has risen back towards $90 a barrel, whilst the yields on 10-year and 30-year Treasuries are, in both cases, at their highest levels since 2002. Yesterday, as we mentioned, the S&P 500 closed above 7,800 points for the first time, driven by gains from semiconductor manufacturers. Today, investors are awaiting the release this evening of the minutes from the Federal Reserve’s latest meeting in September, at which the US central bank raised interest rates for the first time since 2023. On the equity market, the focus is on the performance of tech stocks, including Intel and Nvidia Corp.

Yields on US Treasury bonds are rising again and are at multi-year highs, whilst traders prepare for an auction of 10-year bonds. The benchmark 10-year Treasury bond is currently up by almost 8 basis points to 5.35 per cent, its highest level since 2002. The 30-year Treasury bond is up 8.3 basis points to 5.724 per cent, also reaching a 24-year high. The yield on the 2-year Treasury bond has risen by 2.7 basis points to 4.81 per cent. The Treasury plans to sell $39 billion worth of 10-year bonds at an auction to be held today. This will be the second of three Treasury auctions scheduled for this week. Yesterday, the government sold $58 billion worth of three-year bonds, and tomorrow it is scheduled to sell $22 billion worth of 30-year bonds.

In Milan, buying continues in Stellantis, one of the top performers on the market, whilst Inwit and oil stocks are also rising, driven by rising crude oil prices (Eni; Saipem; Tenaris) but also by the outlook for the Anglo-Dutch industry giant Shell, which is forecasting record refining margins for the third quarter. Bringing up the rear are profit-taking on tech stocks, from Technoprobe to Prysmian, including Stmicroelectronics. Banks are also down: amongst others, Bper Banca and Banco Bpm, as well as Unicredit and Intesa Sanpaolo. The defence sector was also weak, with Leonardo and Fincantieri.

The price of crude oil is rising again, amid fresh attacks by Yemen’s Iran-backed Houthi rebels against Saudi Arabia, tensions in the Strait of Hormuz and fears over a storm forming in the Gulf of Mexico that could develop into a hurricane and hit oil and gas production facilities. The Brent futures price has risen to $101 per barrel; WTI is just under $90. According to international news agencies, Saudi Arabia has intercepted a missile launched by the Yemeni militia north of the capital Riyadh, whilst numerous attacks on Saudi airports have been claimed. Meanwhile, in an interview with Reuters, US Vice-President JD Vance said that Tehran had struck a number of ships, but not enough to halt the flow of oil and gas. Meanwhile, the single currency has fallen below the 1.12 mark, to its lowest level since May 2025, at $1.117 (down from yesterday’s closing price of $1.125). The single currency is also trading at 176.7 yen (down from 178), whilst the dollar/yen exchange rate has risen to 158.2 (up from 158). As for cryptocurrencies, bitcoin is down to around $83,000. Still on the energy front, gas in Amsterdam.