Stock market: crude oil, bonds and tech send Europe into a tailspin; Milan (-2.5 per cent) falls below the 49,000 mark

Nasdaq down 2.5 per cent, led by Tesla and Meta

(Il Sole 24 Ore Radiocor) - Renewed fears over AI, the rally in crude oil prices and the surge in government bond yields. These are the ingredients of the storm that hit the markets during today’s trading session. Thus, whilst on Wall Street the Nasdaq fell by over two per cent, European stock markets also closed in the red. Against this backdrop, Milan is the worst-performing market on the Old Continent; with a fall of 2.54 per cent, it has dropped below the 49,000-point mark (to 48,383), a level not seen since mid-May.

The bullish sentiment that had driven the markets during yesterday’s trading session, explains JPMorgan, “reversed overnight” in the wake of renewed doubts about the sky-high valuations of the key players in the AI rally, foremost among them Meta (-5.8%) and Tesla (-1.08%), both of which had reported underwhelming results. Added to this were fears of a renewed escalation of the war in Iran. According to the New York Times, the United States and Israel are reportedly planning new attacks against Tehran following next month’s US mid-term elections. Furthermore, yesterday Donald Trump told journalists that Washington is not negotiating with the Islamic Republic and that something will happen “quite soon”. All this news has sent energy prices soaring, starting with oil. Brent futures rose by 2.37 per cent to $111.44 per barrel, whilst WTI futures stood at $98.46 (+1.35 per cent). Gas prices have also surged to €90.1 per MWh (+3.1 per cent).

Tension also remains high on the bond market, with the yield on the ten-year French OAT exceeding 5.10 per cent during the day – a level not seen since 2002. At the same time, the OAT-Bund spread, fuelled by growing mistrust in French politics, has risen above 170 basis points – peaking at 173.58, the highest level since November 2011, during the eurozone debt crisis.

Turning to the equity market, the gloom surrounding the tech sector is also evident in Milan, with St (-4.98 per cent), Prysmian (-7.61 per cent) and Technoprobe (-7.63 per cent) slipping to the bottom of the FTSE MIB. Energy stocks were also weak, with Saipem (-6%) and Tenaris (-5.05%) among the losers, as were the banks, with Unicredit (-4.73%) leading the declines. On the upside, Moncler (+2.61%) held its ground following the release of its quarterly results.