Stock market: Europe breathes a sigh of relief as the prospect of Fed tightening recedes; Milan closes up 0.5 per cent
Brent falls to $100, the BTP-Bund spread drops back below 120
(Il Sole 24 Ore Radiocor) - US employment figures, which showed a slowdown in September, have boosted European stock markets, which closed higher on the final trading day of a turbulent week. The prospect of a pause in the Fed’s cycle of interest rate rises has calmed the mood on the markets, after rising inflation in the eurozone – at a three-year high – had caused some turbulence earlier in the day. The market has, in fact, drastically reduced the likelihood of further monetary tightening by the Federal Reserve at its next meeting on 28 October: the CME Group’s futures indicate an approximately 80 per cent probability of the status quo being maintained, compared with a 20 per cent chance of a rate rise – a situation very different from just a few days ago. This is mainly thanks to the US jobs figures: according to industry experts, the figures turned out to be neither too positive (which would have fuelled fears of further Fed tightening) nor too negative, a scenario which would instead have raised concerns about the economy’s resilience.
Against this backdrop, the FTSE MIB in Milan closed 0.49 per cent higher, whilst falling below the 51,000-point mark (50,483) for the first time since June. Meanwhile, the storm surrounding government bonds appears to have passed: the yield on the 10-year BTP has slowed its rise, after peaking at 4.73 per cent, and the spread against the Bund has fallen back below 120 points – to 117 – after an intraday peak of over 132 points. The fall in oil prices also contributed to the optimism on the markets: the December Brent contract fell to around $100 a barrel ($100.7, -1.6 per cent), and the November-expiring WTI contract fell to around $90 (-2.8 per cent) following the G7’s decision to release a large amount of crude oil and diesel stocks.
Turning to the equity market, technology shares continue to dominate on the Milan Stock Exchange: St leads the gains (+6.67 per cent), closely followed by Technoprobe (5.99 per cent) and Prysmian (+3.96 per cent). Stellantis is also performing well (+0.88%) following the September car registration figures. The banking sector is mixed: among the biggest fallers are Bper (-1.04%) and Unicredit (-0.86%). Tim (-2.45%) was the worst performer, whilst Fincantieri (-1.98%) was hit by profit-taking following the previous day’s gains.
In the foreign exchange market, with the prospect of a further monetary tightening by the Fed in October now virtually ruled out, the US dollar’s rally – which yesterday had taken it to its highest level against the euro since May 2025 – is also slowing. The euro/dollar exchange rate stands at 1.125 (+0.2 per cent), whilst the dollar/yen rate is 157.73 (-0.2 per cent).
