Stock markets: all eyes are already on the post-Fed period. Wall Street is down

According to Mabrouk Chetouane of Natixis, two scenarios are emerging. “If the Fed were to adopt a more hawkish stance, long-term interest rates would likely react with nervousness, triggering excessive volatility across all capital markets.” Alternatively, Kevin Warsh could convince investors that this single rate rise is sufficient to “initially contain core inflation before seeing it fall in the medium term”. A prolonged pause that “could lead to easing at the long end of the yield curve, provided the Fed chair proves to be a skilled communicator”, warns Chetouane, who considers the latter outcome “more likely”.

Among Milan’s leading blue-chip stocks, technology shares are gaining ground, with Prysmian (+3.4 per cent) and St (+2 per cent) leading the way. Money is also flowing into Lottomatica (+2.7 per cent) and Cucinelli (+2.2 per cent). There was also buying interest in banks, with Unicredit posting a slight rebound (+0.4%) after its CEO Andrea Orcel began talks with the German government regarding the acquisition of Commerzbank. Oil stocks were mixed amid fluctuations in crude oil prices, with Saipem (+1.4%) and Eni (-0.8%) showing contrasting performance. There were sell-offs in Nexi (-1.3%) and Stellantis (-3.3%), which fell in line with the European automotive sector following a report by Berenberg that downgraded its rating on the stock.

On the foreign exchange market, the euro/dollar exchange rate closed virtually unchanged at around 1.1537 (down from 1.154 the previous day). On the energy front, as mentioned, the price of oil is falling: the October WTI futures contract is trading at around $102 per barrel; the November Brent contract is hovering around $105, whilst attention remains focused on the closure of the key Saudi East-West oil pipeline, which Riyadh claims was damaged by pro-Iranian militias. Natural gas prices are also down, falling to 78 euros per megawatt-hour in Amsterdam. The spread between BTPs and Bunds closed lower, at around 86 basis points, down from 88 points at the previous close. The yield on the 10-year BTp is also down, at 4.37 per cent from 4.41 per cent the previous day.