Stock markets: Piazza Affari struggles, dragged down by the banks. Spotlight on US employment

(Il Sole 24 Ore Radiocor) - European stock markets are trading cautiously; following the previous day’s recovery, they are awaiting the release of US labour market data for indications on the health of the US economy and the outlook for monetary policy. On Thursday, the fall in government bond yields and comments by Fed Governing Council member Christopher Waller regarding the possibility of leaving US interest rates unchanged at the September meeting had eased fears over debt financing costs and allowed share prices to rise. Consequently, the FTSE MIB are trading below par, whilst elsewhere in Europe, Paris (CAC 40 ) and Madrid (IBEX 35 ). Amsterdam is up (AEX ).

The market is paying close attention to US labour market data. Over the past 12 months, figures on new US jobs have been rather volatile, according to analysts at Mps. ‘The monthly decline in July (-23,000) was the second largest in recent history, mainly due to a sharp rise in redundancies in the public sector – a factor that could be considered temporary, although signs of weakness in the labour market are emerging from various quarters.’ For August, the consensus forecast is for an increase in new jobs (+55,000). “A figure well above the consensus could confirm that July’s decline was merely a one-off; conversely, another negative figure would intensify fears of a possible sharp economic slowdown”. The labour force participation rate is also worth monitoring, as it was the main cause of the fall in the unemployment rate in July. A further decline could confirm actual weakness in the labour market.

On the Milan Stock Exchange, Stmicroelectronics is rising, following gains on Asian markets and Wall Street, where tech shares have benefited from the rally in Snowflake thanks to the encouraging outlook announced by the company. Among the leading Milanese stocks, buying interest also favoured Lottomatica Group, on its second day of recovery following the slump that followed the announcement of the acquisition of the Spanish firm Cirsa. Also performing well was Stellantis,which is rising alongside the entire European automotive sector thanks to the approval of Volkswagen’s new restructuring plan. Bringing up the rear on the index are the banks, with the market keeping a close eye on developments in the sector’s risk situation. The worst performers are Banco Bpm and Unicredit and Bper Banca.

In the foreign exchange market, reduced certainty regarding a rise in US interest rates as early as this month (market futures now price in a probability of around 52 per cent, down from 63 per cent on Thursday) has weighed on the dollar, with the euro remaining above the 1.16 mark: the single currency is trading at 1.1621 dollars, down from 1.1624 at Thursday’s close. The yen has retreated slightly following yesterday’s surge: the Japanese currency is trading at 181.67 to the euro (down from 180.72) and at 156.32 to the dollar (down from 155.66). Bitcoin is down 1 per cent at $80,817.

On the energy front, oil prices have reversed course: the October WTI futures contract fell by 0.79 per cent to $90.58 per barrel, whilst the November Brent contract stood at $95.06 (-0.48 per cent). Bitcoin is down 0.6% at $81,100. There is a slight fall in natural gas in Amsterdam, where the benchmark futures contract fell by 1.1 per cent to 71 euros per megawatt-hour.