Stock markets: a week of losses for Europe, caught between oil prices and interest rates. Milan down 0.3 per cent. WS up 0.98 per cent

(Il Sole 24 Ore Radiocor) - Despite the gains recorded in the last trading session, European stock markets closed in the red for the eighth day running, with the war in the Middle East taking centre stage, alongside the twin spikes in oil and gas prices and central bank policy. Whilst Milan managed to limit its losses (-0.3%), Paris (-3.6%), Frankfurt (-2.2%) and London (-1.5%) posted the worst performances. Sentiment this week continues to be driven by the mutual attacks between the United States and Iran and the damage to several oil tankers, which have caused the price of Brent to surge over the past five trading sessions: +9.2% to $105 a barrel; WTI +8.6% to $100.6. TTF gas prices also rose, up 12.5% to €81.50 per MWh. The bond market is under scrutiny: the yield on the ten-year German Bund rose over the course of the week from 3.34 per cent to 3.50 per cent, whilst that of the BTP rose from 4.14 per cent to 4.36 per cent. The spread between the two bonds has thus widened by around 5 basis points, from 80.6 to 85.2 points. In the equity market, banking risk continued to dominate the scene, amid the green light from the shareholders’ meeting of Intesa Sanpaolo (+0.9%) for the capital increase to fund the OPAS bid for MPS (+3.5%) and developments in the Siena deal. BPM (-2.6%) bucked the trend. On the Milan Stock Exchange, Lottomatica (+11.8%) stood out, riding the wave of its mega-merger with the Spanish firm Cirsa. Next came Tenaris (+10.2%). Generali also performed well (+4.9%). Brunello Cucinelli (-13.3%) and Leonardo (-11.1%) faced a tough day. Avio has fallen by 9.4% over the past five trading sessions, despite Friday’s strong rebound following the half-year results.

European stock markets closed higher on 11 September, with US inflation figures rising to 3.4 per cent, in line with estimates. It now remains to be seen what the Fed will do regarding monetary policy: whilst the ECB decided the day before to raise interest rates by 25 basis points, next week it will be the turn of the US central bank, with market participants increasing their bets on a quarter-point rise in the benchmark interest rate by the Federal Open Market Committee (FOMC). According to the CME Group’s FedWatch tracker, which monitors the prices of Federal Reserve interest rate futures, the probability of a rate rise has risen from 70 per cent to 90 per cent.

Meanwhile, attention remains focused on commodities and, in particular, on oil, which, despite falling, remains at high levels. After all, tensions in the Middle East persist and, on the eve of the announcement, it emerged that senior US officials had discussed with President Donald Trump the possibility that the war could drag on until the end of his term of office. Also causing concern are the sales on the bond market, which have pushed interest rates on numerous government bonds to their highest levels in years: the ten-year German Bund is yielding over 3.5 per cent, whilst the ten-year Treasury is yielding over 4.9 per cent.

Thus, Milan closed the session up 1.36 per cent, posting the best performance on the European markets; Paris was also in positive territory (+0.78 per cent), Frankfurt (+0.77 per cent) and the other European markets.

Wall Street closed higher following the latest inflation figures, which, according to market participants, will prompt the Fed to raise interest rates by 25 basis points next week. The Dow Jones rose by 0.98 per cent to 52,572.81 points, the Nasdaq advanced by 0.96 per cent to 26,333.04 points, whilst the S&P 500 is up 0.86 per cent at 7,656.85 points.
According to the CME Group’s FedWatch tracker, the probability of a rate rise has risen from 70 per cent to 90 per cent. Turning to the figures, consumer prices in the United States kept pace, in line with estimates. The Consumer Price Index (CPI) rose by 3.4 per cent year-on-year, as in July and as forecast by experts. On a month-on-month basis, there was a rise of 0.4%, again in line with expectations. ‘Core’ figures – excluding energy and food – rose by 0.3 per cent (compared with the expected 0.2 per cent) and by 2.4 per cent year-on-year (in line with the consensus), following 2.5 per cent the previous month. The energy price index rose by 2.1 per cent, representing an annual increase of 16.3 per cent. The food price index rose by 0.1 per cent over the month and by 2.7 per cent over the year. Still on the macro front, the US consumer confidence figure deteriorated in September. In the preliminary reading, it fell from 51.7 points the previous month to 47.8 points, against estimates of 51.4 points.