Stock markets in the red amid soaring oil prices and ECB tightening. Treasury yields soar
The 30-year bond yield has reached 5.35 per cent, its highest level since 2004. WTI crude oil has hit $100 and Brent is trading at around $105, their highest levels since last May. TTF gas prices have exceeded 82 euros per MWh
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(Il Sole 24 Ore Radiocor) – European stock markets are trading near their daily lows following the ECB’s – widely anticipated – decision, with Milan holding steady close to parity (FTSE MIB), whilst Paris is in the red (CAC 40) and Frankfurt (DAX 40). The price of oil, after an initial pullback, immediately resumed its upward trend as the war in the Middle East shows no sign of ending and attacks on oil tankers have intensified. TheNovember Brent reached the $105 per barrel mark, its highest level since last May, whilst US WTI has also returned to above the $100 mark.
The ECB, as widely expected, has raised interest rates by 25 basis points, bringing the key rate to 2.5 per cent. All eyes, however, are on the tone adopted by ECB President Christine Lagarde: “The outlook remains highly uncertain, with upside risks to inflation and downside risks to economic growth”, she said at a press conference in Berlin, although “the Governing Council remains well-positioned to address the uncertainty caused by the conflict” in the Middle East.
Wall Street sluggish ahead of Friday’s inflation figures
Wall Street is also trading lower, with oil prices continuing to rise. Traders are focusing on the day’s other market mover, the data on US producer prices for August, which rose by 0.4 per cent month-on-month and increased to 5.4 per cent year-on-year, still well above the Fed’s 2 per cent inflation target and exceeding expectations. A figure “particularly influential ahead of Friday’s consumer price data, as some components feed directly into the PCE deflator”, note analysts at MPS. And as Fed member Waller recently emphasised, this week’s inflation figures will be decisive for the outcome of the Fed’s 16 September meeting. At present, forecasts put the probability of a 25-basis-point rate hike at 60 per cent. In the equity market, chip stocks are under pressure, particularly Nvidia Corp and Intel.
Lottomatica rises in Milan; Poste and Tim are weak
On the Milan stock exchange, all eyes remain on the banking sector on the day of the AGM of Intesa Sanpaolo’s AGM, which gave the green light to the capital increase to fund the takeover bid for Banca Monte Paschi Siena. The Siena-based bank has announced that it has filed with Consob the documents relating to the voluntary public exchange offer for Banco Bpm and those relating to the voluntary public exchange offer on Banca Generali.
On the rise Lottomatica Group takes the lead on the index, whilst Leonardo following the sector’s weakness the previous day and an upgrade from BNP Paribas. Also among the top performers are Snam and Inwit. At the bottom of the list, Moncler alongside tech stocks such as Stmicroelectronics and Prysmian. Weak Poste Italiane and Telecom Italia are performing poorly on the eve of the expiry of the takeover bid launched for the telecoms group.
