EU stock markets in the red as inflation accelerates in August. Banks down in Milan
Brent crude remains above $90 per barrel, with gas prices at around 70 euros per MWh. Government bond yields are rising, with BTPs at their highest level since 2023
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(Il Sole 24 Ore Radiocor) - European stock markets took a turn for the worse mid-morning, in the first trading session of September, whilst oil prices continue to rise amid renewed tensions in the Middle East. The inflation figures for the eurozone do not help matters, having shown an acceleration in August, mainly reflecting the trend in energy prices. Turning to the geopolitical front, the recent exchange of attacks between Washington and Tehran has prompted US President Donald Trump to state that the US would ‘strike hard’, whilst the Iranian armed forces have warned Middle Eastern countries against allowing the US to use their territory and airspace for attacks against Iran, stating that Tehran will respond with ‘significantly greater’ force to any new aggression. “The renewed hostilities have dashed recent hopes of progress towards the normalisation of maritime traffic through the Strait”, commented analysts at Commerzbank Research. As a result, the FTSE MIB in Milan is in line with other European indices: CAC 40 DAX 30 AEX Ibex 35 FTSE 100.
EU inflation accelerates in August, up 3.3 per cent year-on-year
Inflation accelerated in August. According to preliminary estimates, last month the national consumer price index for the whole population (NIC), excluding tobacco, recorded a month-on-month increase of +0.5% and a year-on-year increase of +3.3% (up from +2.9% the previous month). The rise in inflation, the statement explains, mainly reflects trends in energy prices, both unregulated (from +11.4% to +16.9%) and regulated (from +14.8% to +18.8%); by contrast, prices for recreational, cultural and personal care services (from +3.0% to +2.6%) and transport-related services (from +1.6% to +0.9%) are slowing. In August, ‘core inflation’, calculated excluding energy and fresh food, slowed slightly (from +1.6% to +1.5%), as did inflation excluding energy alone (from +1.8% to +1.7%).
Oil shares perform well on the Milan Stock Exchange; banks see selling
At the top of the Milan stock exchange list is Stmicroelectronics , followed by oil stocks Tenaris and Eni , and utilities, buoyed by rising crude oil prices. The banking sector is in the red. Stellantis is in the red in the wake of the round of appointments that saw Belloni take the helm at Fiat. Bringing up the rear on the Milan stock exchange are Azimut and Fincantieri .
Oil and gas prices rise amid geopolitical tensions; euro/dollar exchange rate stable
The Brent for November delivery is up by around half a percentage point, very close to $91 a barrel, whilst the October WTI is trading above $86 (+0.65%). gas in Amsterdam is also up slightly at 70 euros per megawatt-hour (+0.2%). In the currency markets, the euro/dollar stands at 1.1607 (down from 1.161 at Monday’s close), the single currency is also trading at 185.59 yen (from 185.58) and the dollar/yen stands at 159.89 (159.77). In the commodities market, spot gold was little changed at $4,435 per ounce (-0.3%).
Government bond yields are rising; BTPs at their highest since 2023
Global bond yields continue to rise, reaching their highest levels in the last twenty years. The yield on the 10-year Treasury has risen to 4.79 per cent, its highest since January 2025. The yield on the 10-year BTP has risen to 4.17 per cent, its highest since November 2023, whilst the German Bund yield stands at 3.34 per cent, its highest since April 2011.
