Stock markets: Europe remains cautious. In Milan, all eyes are on the banking sector’s risks

(Il Sole 24 Ore Radiocor) - European stock markets continue to move in a mixed fashion, with Paris down (CAC 40) and a falling Milan (FTSE MIB) and the other indices rose slightly, led by Madrid (IBEX 35). After a modest start (with the exception of Paris), the markets were shaken by the news that early elections will be held in Spain, which has brought political uncertainty back to the fore. “Having duly informed the Head of State, I have decided to convene an extraordinary Council of Ministers this very morning to dissolve the Cortes Generales (the two houses of Parliament, ed.) and call a general election, which will take place on Sunday 29 November”, announced Spanish Prime Minister Pedro Sánchez this morning, shortly after 9 am. The yield on the Spanish 10-year bond rose within seconds from 4.06 per cent to 4.08 per cent, before reaching 4.12 per cent. Political developments continue to influence the performance of government bonds both in Europe and across the Atlantic, with yields at their highest levels in years. The US 10-year Treasury yield stands at around 5.27 per cent, a level that is raising doubts and concerns, despite being below the highs reached last week above the 5.3 per cent threshold – levels not seen since 2002.

Meanwhile, investors’ attention remains focused on the Middle East: the Houthis have attacked Saudi Aramco facilities, and Riyadh has already announced new offensives in Yemen. In any case, the price of crude oil is taking a breather: the WTI is trading lower at around $90 per barrel, whilst Brent is trading slightly higher at around $102. Gas prices in Amsterdam are also fairly stable, at around 74 euros per megawatt-hour.

US futures, however, are trading little changed following Friday’s strong performance, with the Nasdaq setting a new intraday record, buoyed by the release of a surprisingly weak jobs report, which has reinforced expectations that the Federal Reserve will keep interest rates unchanged in October. On the corporate front, PTC is up by over 35 per cent in pre-market trading after Schneider Electric reached an agreement to acquire the software company in an all-cash deal worth $22.6 billion. Cerebras Systems rose by more than 4 per cent after Sam Altman described the chip manufacturer as a close partner of OpenAI.

The Italian spread, after hitting highs of around 130 points on Friday, has today fallen back to 111 basis points, down from 117 points. The yield on the benchmark 10-year BTp has fallen to 4.55 per cent from 4.69 per cent recorded the previous day. The yield on the German Bund stands at 3.48%, whilst the French 10-year OAT continues to cause concern at 4.87%. The  spread between the OAT and the Bund &is now down to 137 points after having reached as high as 147, five points higher than the previous day. The markets are watching the tensions in France with concern, ahead of the elections to be held next year, when, incidentally, Italia will also be heading to the polls.

In Milan, all eyes are on the banks, and in particular on Intesa Sanpaolo and Banca Monte Paschi Siena, following the news that the bank led by Carlo Messina has decided to raise its bid for Rocca Salimbeni, provided, however, that the Siena-based bank’s general meeting, scheduled for the end of the month, does not approve the merger with Banco Bpm and Banca Generali . In particular, Intesa has put 25 cents more on the table for each MPS share. MPS shareholder Delfin has already indicated that it will accept Intesa’s offer. Bringing up the rear is Mediobanca, whose future remains uncertain, whilst at the other end of the spectrum Unipol, the institution set to acquire half of the Siena-based bank, including its brand and headquarters, and merge it with Bper Banca. Generali remains under close scrutiny, given that the long-term repercussions of Intesa’s takeover of MPS will also reach Trieste. In addition to banking stocks, Technoprobe is still rising strongly alongside tech stocks, although the pace has slowed compared with the early stages. Furthermore, Amplifon and Fincantieri. Down, on the other hand, were Prysmian and Lottomatica Group. As regards extraordinary transactions, today Webuild raised its bid for Trevi Fin Ind to 5.165 euros.