Stock market: oil and interest rates weigh on Europe this week, but Milan (-0.3 per cent) holds its ground
Cucinelli down (-13 per cent) and Leonardo down (-11 per cent); Lottomatica up (+11 per cent)
(Il Sole 24 Ore Radiocor) - A week marked by war, soaring oil and gas prices, and central bank moves, which left most European stock markets in the red. However, the Milan Stock Exchange (-0.3 per cent) managed to limit its losses following a late rally, unlike Paris (-3.6 per cent), Frankfurt (-2.2 per cent) and London (-1.5 per cent). Sentiment continues to be driven by the tit-for-tat attacks between the United States and Iran and the damage to several oil tankers, which have sent the price of Brent soaring over the past five trading sessions: +9.2% to $105 per barrel; WTI +8.6% to $100.6. TTF gas prices are also rising, up 12.5 per cent to 81.50 euros per MWh. Added to this is the return of the Houthi threat to Red Sea shipping lanes: “A scenario of maximum alert for global energy markets”, with the “complete isolation of Saudi Arabia”, writes Saverio Berlinzani of ActivTrades.
On the monetary front, the ECB raised interest rates by 25 basis points, as expected, leaving the door open to further tightening. In the US, attention is already turning to the Federal Reserve, which is due to announce its decision next week: a 25 basis point rise is 90 per cent likely according to the consensus. Price pressures remain resilient and have strengthened expectations of a double rate rise in 2026. The shift in monetary expectations is also evident in the bond market. The yield on the ten-year German Bund rose over the course of the week from 3.34 per cent to 3.50 per cent, whilst that of the Italian BTP rose from 4.14 per cent to 4.36 per cent. The spread between the two bonds has thus widened by around 5 basis points, from 80.6 to 85.2 points.
In Milan, meanwhile, the banking shake-up continued to dominate the headlines, with Intesa Sanpaolo’s (+0.9%) shareholders’ meeting giving the green light to the capital increase for the OPAS bid for MPS (+3.5%) and developments in the Siena deal. BPM (-2.6%) bucked the trend. On the Milan Stock Exchange, Lottomatica (+11.8%) stood out, riding the wave of its mega-merger with the Spanish firm Cirsa. Tenaris (+10.2%) followed. Generali (+4.9%) also performed well. On the downside, it has been a tough week for Brunello Cucinelli (-13.3 per cent) and Leonardo (-11.1 per cent). Avio has fallen by 9.4 per cent over the past five trading sessions, despite Friday’s strong rebound following the half-year results.
Finally, the euro-dollar exchange rate showed little movement, with the single currency down 0.1 per cent over the week to $1.1602.
