Stock market: Europe remains cautious, with all eyes on quarterly results and the tech sector. Eni performs well in Milan

(Il Sole 24 Ore Radiocor) - European markets European stock markets saw a cautious rise in early trading following the sell-off in recent sessions, whilst Asian markets were mixed, with Tokyo’s Nikkei up by over one per cent and Chinese indices down. On Tuesday, Wall Street closed mixed, with the Dow Jones and S&P 500 rising thanks to a series of positive quarterly results and falling oil prices, which offset the pressure on shares linked to artificial intelligence. As a result, the FTSE MIB in Milan and the CAC 40 in Paris, despite the strong performance of Essilorluxottica in the wake of its results, the DAX 40 in Frankfurt, the IBEX 35 in Madrid, the AEX in Amsterdam. Lagging further behind is the FTSE 100 in London is lagging behind, with inflation rising to 3.5 per cent year-on-year in September.

Risk appetite therefore appears to have improved following a global sell-off in the technology sector that lasted several days, partly driven by SpaceX’s results (+9.3%), which announced a 161 per cent rise in turnover in the third quarter, exceeding Wall Street’s estimates, with its artificial intelligence business growing ninefold and the rumoured merger with Tesla. Meta and Tesla are now facing a financial test.

However, concerns remain regarding the sustainability of the trend linked to artificial intelligence. Investors are increasingly focusing on the financial strength of balance sheets and the sustainability of debt levels at companies linked to artificial intelligence, whilst the quarterly results season continues in full swing in Europe and the United States. Against the backdrop of strong growth in the sector, attention is also focused on companies’ ability to finance investments and generate sufficient cash flow. “The market is increasingly asking not only whether the demand for AI is genuine, but also who is financing it, on what terms and with what margin of safety,” commented Tickmill Group.

On the Milan Stock Exchange, tech shares are showing signs of a rebound, with Technoprobe leading the main index with a rise of over two and a half points, whilst Prysmian and Stmicroelectronics , which is due to report its results next week. Buying was also seen in oil stocks, with Eni , Saipem and Tenaris are being buoyed by the oil price, which is rising again following fresh attacks on ships in the Strait of Hormuz that are jeopardising shipments. Banks are weak, whilst Nexi slips to the bottom of the list. Outside the main index, Salvatore Ferragamo is down following first-nine-month results in line with expectations, but a third quarter of falling sales. Conversely, a rise in quarterly results is driving Essilorluxottica higher; in Paris, the share price rose by more than 11 per cent after the company reported a 9 per cent increase in third-quarter revenue to 7.49 billion.

Tensions in the Middle East also remain a cause for concern, with oil prices rising again following fresh attacks on ships in the Strait of Hormuz, which are jeopardising shipments. Brent crude is up 1.45 per cent at $110.37 per barrel, whilst WTI is edging closer to the $100 mark at $99.11 (+1.32 per cent). In this context, US data on crude oil stocks and production will be key.
Meanwhile, natural gas prices are climbing again to €87.9 per MWh (+3.4%).