Stock markets: Europe down following the Nasdaq’s ‘Black Thursday’; banks fall in Milan
Wall Street saw heavy selling yesterday, with the tech index falling by more than 5 per cent on fears that the Democrats might curb the development of AI. Oil prices rose slightly, whilst the euro fell below $1.12.
(Il Sole 24 Ore Radiocor) - European stock markets opened weakly, rattled by yesterday’s slump on Wall Street. The sell-off hit technology shares particularly hard, causing the Nasdaq to lose over 5 per cent, bringing it to levels 15 per cent below the highs reached on 6 October. However, Nasdaq futures are trading in positive territory this morning (+1 per cent), driven by traders’ bets on a possible recovery as early as today’s session. Uncertainty remains, however, regarding the future of the AI revolution: a process that is unlikely to be curbed by a Democrat-led US Congress, but which will probably be subject to new regulations. Furthermore, the market is beginning to factor in a slowdown in the infrastructure build-up, primarily the data centres required for AI to function. These new assessments have triggered a sell-off in US shares, which this morning has also spread to Asian markets (Seoul and Tokyo down by around 6 points). In early trading, Milan was down 0.9 per cent, after opening more than 1.5 per cent lower. Other European indices are also down, although they have recovered some ground since the opening.
Government bond yields falling, spread around 109
Meanwhile, investors are pouring their cash into government bonds, which are regarded as a sort of safe haven, at a time when the stock market is undergoing a rally. Consequently, the yield on the ten-year German Bund stands at 3.26 per cent, whilst that on the Italian BTP of the same maturity stands at 4.31 per cent (the spread is therefore in the 109-point range), well below the peak of around 4.7 per cent reached a few weeks ago. Treasury yields are following a similar trend: the 10-year yield stands at 4.83 per cent (having risen as high as 5.36 per cent in October), despite concerns over the US public deficit. Following the previous day’s rises, the price of gold – another safe-haven asset – rose by 0.4 per cent: the yellow metal is trading at around $4,072 per ounce. On the macroeconomic front, meanwhile, key labour market figures are due to be released in the US.
Banks under pressure on the Milan Stock Exchange; Technoprobe attempts a rebound
On the Milan Stock Exchange, bank shares are trading lower, weighing on the performance of the main index. Banca Monte Paschi Siena is limiting its losses to 0.3 per cent, on the day its quarterly results were released, showing net profit up to 543 million, a result that brings the nine-month figure to 1,657 million, up 21.2 per cent on a like-for-like basis. The bank’s CEO, Luigi Lovaglio, at the start of the conference call with analysts, commented on the outcome of the shareholders’ meeting, which rejected his strategy: “We fully respect this decision and will continue on our path with the same discipline and sense of responsibility that have always guided us. Our objective remains clear: to deliver results, support our customers and our people, and continue to create value for all our shareholders’. The CEO of Siena also announced an upward revision to the 2026 pre-tax profit forecast, to 3.7 billion from the previous estimate of 3.6 billion. Banco Bpm , on the other hand, is down by over 2 per cent, despite its improving results. Following the falls in recent sessions, Leonardo shares are holding up well. Lottomatica Group are also performing well. Following a shaky start, Technoprobe and Stmicroelectronics following the previous day’s slump, with falls of almost 10 per cent.
Euro falls below 1.12 dollars, oil prices rise slightly
In the currency markets, the dollar has strengthened against the major currencies, but the decline in risk appetite could weigh on market sentiment: the euro/dollar is at 1.118 (from 1.1217 at the previous close), the dollar/yen at 158.04 (from 157.653) and the euro/yen at 176.73 (from 176.838). Meanwhile, oil prices are rising again, heading for the close of a volatile week: hopes that the outcome of the US mid-term elections might lead to a resolution in the Middle East triggered a sharp sell-off, but oil prices recovered as markets reassessed the initial reaction. Furthermore, tensions in the Middle East remain high, with Saudi Arabia issuing warnings of potential danger in Yanbu, an oil export hub on the Red Sea. As a result, the December WTI contract rose by 0.9 per cent to $91.42 per barrel, whilst the January Brent contract rose by 1.23 per cent to $99.54.
