Stock market: global flight from bonds spreads to the markets, Milan brings up the rear (-1.3 per cent)
(Il Sole 24 Ore Radiocor) - A domino effect is being felt across the markets, where inflation and soaring oil prices are driving government bond yields to levels not seen for twenty years, thereby fuelling fears of interest rate hikes by the Fed and the ECB. It is the flight from government bonds, in fact, that is dominating investor sentiment at present, whilst US-Iran tensions and the crisis in the Strait of Hormuz are pushing Brent crude towards $92 a barrel and weighing on share prices. The surge in prices is also evident in the eurozone, where the inflation rate rose to 3.3 per cent in August – well above the Eurotower’s target (which is set to raise interest rates at its next meeting).
Against this backdrop, the Milan Stock Exchange is the worst performer, closing the day down 1.3 per cent and thus returning to late-July levels. This time, Poste Italiane (-3.8 per cent) bore the brunt of the pressure on bond yields, alongside TIM (-3.6 per cent), which is currently the subject of a public takeover bid by the company led by Matteo Del Fante. However, almost all FTSE MIB stocks closed in the red, starting with banks and insurers grappling with the game of Risk. Prysmian (-2.6%) was also down after analysts at Jefferies cut its target price. Stellantis (-2.4 per cent) lost ground in the wake of Arnaud Belloni’s appointment as CEO of Fiat, Abarth and Lancia. In contrast, the rally in oil stocks continues, driven by crude oil prices, from Tenaris (+1.9%) to Eni (+1.5%).
In the currency markets, the euro has edged down to 1.1592 dollars (from 1.1610 at yesterday’s close). The single currency is also trading at 185.58 yen (185.58), whilst the dollar/yen exchange rate stands at 160.08 (159.77). In the commodities market, spot gold fell to $4,365 per ounce (-1.8 per cent). Gas rose by 3.7 per cent to 72.3 euros per MWh. Finally, the rise in oil prices shows no sign of slowing: November Brent is trading at $92.2 per barrel (+1.9 per cent), whilst October WTI is at $87.9 (+2.4 per cent).
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