Stock markets: Europe sees a cautious rise as oil prices fall. All eyes on US inflation figures and Nvidia’s results

(Il Sole 24 Ore Radiocor) - The European stock markets are trading mixed after the midway point of the session, whilst investors await the release of US PCE inflation figures and, above all, the quarterly results from Nvidia Corp, later this evening (Italian time), to assess the outlook for the technology sector and, in particular, artificial intelligence. On the macro front, the market expects the July PCE figure to stabilise, the Fed’s key inflation indicator, with the core figure at 3.3 per cent year-on-year and a slight slowdown in the headline figure to 3.6 per cent from 3.7 per cent, partly in light of the latest PPI data, which had shown a mixed trend across the components included in its calculation. An easing of inflationary pressures was also evident from the latest July inflation figures. ‘A figure well above expectations,’ note the experts at MPS, ‘could prompt the Fed to adopt a more restrictive stance.’ Furthermore, Thursday marks the start of the Jackson Hole central bankers’ symposium, with a speech by Fed Chairman Kevin Warsh scheduled for Friday. The situation in the Middle East also remains in the spotlight, with the price of oil still falling following the announcement of the sweeping US economic sanctions against Iran. Consequently, Milan is up (FTSE MIB), Paris (CAC 40 ), and Madrid (IBEX 35 ), with Frankfurt lagging behind (DAX 40) London (FTSE 100).

Among Milan-listed stocks, oil companies are being hit by the fall in crude oil prices and new proposals to tax so-called windfall profits: down Eni, as well as Saipem and Sna. Leonardo is also down, whilst A2a is benefiting from the positive assessment by Kepler Cheuvreux analysts, who have confirmed their ‘buy’ recommendation and raised the target price to 3 euros (from 2.8) based on a scenario of gas prices higher than estimated and better profitability compared to competitors. Buying interest is also focusing on Buzzi, Azimut and the luxury sector, with Moncler and Brunello Cucinelli

On the energy front, as mentioned, the price of oil is falling, whilst Iran and Oman were discussing an ‘interim framework’ aimed at resuming shipments through the Strait of Hormuz. Specifically, the October WTI futures contract fell by 1.86 per cent to $80.33 per barrel, whilst the Brent contract for the same expiry date dropped by 1.84 per cent to $86.95. Overall, this week’s 8.5 per cent fall in crude oil prices has eased inflation fears, boosting government bond prices. Natural gas prices are also falling, with the price on the Amsterdam TTF platform, where prices fell by 5.4% to 63 euros per megawatt-hour.

In the foreign exchange market, the euro/dollar exchange rate was little changed at 1.1667, down from 1.1670 at Tuesday’s close. The single currency is also trading at 185.49 yen (down from 185.90), whilst the dollar/yen exchange rate stands at 159.05 (down from 159.26). Gold fell by 0.3 per cent to $4,645 per ounce, whilst Bitcoin remains at around $79,000.

The spread between BTp and Bund bonds has edged down slightly. At the start of trading, the yield spread between the benchmark 10-year BTp and the German bond of the same maturity stood at 80 basis points, one point lower than Tuesday’s close. The yield on the benchmark 10-year BTp has fallen, recording fell below the 4 per cent threshold for the first time, to 3.99 per cent from 4.01 per cent in the previous reading.