Stock market: Piazza Affari rebounds, led by tech and defence sectors; Leonardo surges

(Il Sole 24 Ore Radiocor) - European stock markets are edging cautiously higher, whilst London lags behind, with the FTSE 100 looking weak in the wake of the formation of the new government led by Andy Burnham. Investors are, once again, keeping a close eye on news from the Middle East. According to brokers, Qatar has put forward the idea of a 10-day ceasefire and the lifting of restrictions on shipping through the Strait of Hormuz to ease tensions, but hopes for a détente have been dashed by Donald Trump’s new threats against Iran. The US President has stated that Tehran will ‘pay dearly’ for killing American soldiers, triggering a series of tit-for-tat attacks. On the trade front too, Trump has stepped up the rhetoric, preparing to impose new tariffs on dozens of countries and announcing, with effect from next month, “additional tariffs of 50 per cent” on certain goods imported from Canada “in response to Canada’s discriminatory treatment of American products”.

The markets are also assessing the ongoing earnings season, with results from Alphabet and Tesla (on Wednesday) and Intel (on Thursday) in particular eagerly awaited, following a shift in recent weeks in investors’ approach to semiconductor stocks and those linked to artificial intelligence. “In the short term, I think the party will continue,” said Jeff McClean, chief executive of Solidarity Wealth. “In the longer term, however, there are some concerns: can these profits be sustained at these levels over time?” he asked.

Stock indices on Wall Street are trading higher, with investors – having analysed the latest developments in the war with Iran – now focusing on corporate quarterly results. Shares in 3M are soaring, after the industrial giant reported better-than-expected second-quarter profits. General Motors has also reported quarterly results that beat forecasts. The earnings season has got off to a promising start: of the approximately 54 S&P 500 companies that have published their results, 87 per cent have beaten earnings estimates, according to FactSet. Among the major companies set to report their results by the end of the week are Alphabet, IBM and Tesla. Today’s rise follows a negative session, during which traders assessed the escalation of the conflict between the US and Iran. The US has carried out its tenth consecutive night of attacks against Iran since President Donald Trump declared that the ceasefire was ‘over’, whilst forces in Tehran have struck US military targets across the Middle East. Mediation efforts are continuing, however: according to some reports, mediators are proposing a 10-day ceasefire between the two sides.

On the stock market front, all eyes remain on Telecom Italia in the wake of the launch of the takeover bid by Poste Italiane . Prysmian has surged to the top of the market, buoyed by a positive rating from Jefferies, which has raised its target price to 180 euros from 178. Buying continues in Stmicroelectronics , in the wake of the recovery in the European tech sector, but defensive stocks are also performing well, with Leonardo – also buoyed by an additional order for 11 helicopters in Saudi Arabia – and Avio and Fincantieri , following Prime Minister Meloni’s comments on Portugal’s purchase of three frigates from the Italian group. Oil companies, on the other hand, are suffering from the slowdown in crude oil prices: down Tenaris and Saipem , with the exception of Eni – which, as the majority shareholder in Var Energi, stands to benefit from the Norwegian company’s acquisition of BlueNord. Outside the main index, attention is also focused on The Italian Sea Group is also in the spotlight, following the resignation of Giovanni Costantino, chairman of the board and CEO, and board member Gianmaria Costantino (his son), which led to the dissolution of the entire board.

In the currency markets, the euro is trading at $1.142 (up from $1.141 at yesterday’s close) and at 185.5 yen (up from 185.4), whilst the dollar-yen exchange rate stands at 162.5 (unchanged).
On the energy front, oil prices are down, with Brent at $88.38 per barrel (-0.94 per cent) and WTI at $82.26 (-1.17 per cent). However, prices remain well above the level of around $72 per barrel recorded before the war began at the end of February. The US benchmark crude lost 0.3 per cent, settling at $82.24 per barrel.
Gas prices in Amsterdam also reversed course, falling to €58.2 per megawatt-hour (-0.9 per cent).