Stock markets: high oil prices weigh on Europe. In Milan (-0.1 per cent), TIM performs well following the relaunch of Poste

(Il Sole 24 Ore Radiocor) - The surge in energy prices and the escalating geopolitical tensions in the Middle East are weighing on European stock markets, which closed lower following a volatile session. Oil remains the focus of market attention and is reigniting fears of an inflationary shock: with Brent crude nearing $100 a barrel, the markets are now pricing in thepossibility of a longer war and greater disruption to global energy markets. Compounding the situation is a series of attacks by Yemen’s Houthis, which have also targeted energy infrastructure in southern Saudi Arabia.

A combination of factors being closely monitored by central banks, with the ECB expected to raise interest rates for the second time this year on Thursday 10 September, and the Fed awaiting US inflation figures on Friday 11 to decide on its next moves ahead of the meeting on 16 September. Consequently, the FTSE MIB in Milan closed down 0.1 per cent, whilst the DAX in Frankfurt was also down (-0.05 per cent), Madrid’s Ibex (-0.25 per cent) and London’s FTSE 100 (-0.1 per cent). By contrast, Paris’s CAC (+0.14 per cent) and Amsterdam’s AEX (+0.06 per cent) held their ground.

Stock indices on Wall Street are falling. This is being driven by the conflict between the US and Iran, and the resulting rise in oil prices, as well as growing trade tensions between Canada and the United States, following the entry into force of Canadian retaliatory tariffs on approximately $20 billion worth of US goods. The Fed is due to hold a monetary policy meeting next week: according to the CME Group’s FedWatch Tool, market participants estimate a 60 per cent probability that the central bank will raise interest rates by a quarter of a percentage point.

On the Milan Stock Exchange, all eyes are on the takeover bid for Telecom Italia (+2.89%), which is among the top performers on the main index after the board of directors of Poste Italiane (+0.53%) raised the cash portion of the offer by €0.30, bringing the total to €1.97, plus 0.218 ordinary shares in Poste. Oil stocks are also up, once again in the wake of rising crude oil prices: Eni (+1.25%), Tenaris (+1.35%) and Saipem (+0.72%) stand out following the award of a new contract in Turkey. Fincatieri (+2.11%) and Prysmian (+2.39%) also performed well, with Inwit (+3.13%) leading the way. Unicredit had a weak session (+0.33%) following the ECB’s approval of the ‘Danish Compromise’ on insurance holdings. Bringing up the rear were Stellantis (-2.8%) and St (-3.41%), alongside European tech stocks, weighed down by the lukewarm reception in Hong Kong to Longsys’s mega-IPO and a sector report from Morgan Stanley.

Oil prices have risen yet again, with Brent repeatedly approaching $100 a barrel before settling at around $98, whilst WTI is trading just below $93. Fuelling the rally in crude oil are the new attacks by the Houthis in southern Saudi Arabia and the deadlock in negotiations over the Strait of Hormuz, regarding which ‘there remains uncertainty as to what the US reaction will be’ to a possible agreement between Iran and Oman “and, above all, whether the naval blockade – which has led to attacks on several ships in recent days – will remain in place”, emphasise analysts at MPS. There was also a sharp rise in the price of European gas in Amsterdam, to close to 76 euros per MWh.