Stock markets: Europe takes a breather after a record half-year. Milan -0.15%

(Il Sole 24 Ore Radiocor) - European stock markets are taking a breather following the rally seen over the past six months, which saw the FTSE MIB gain 15%. The slowdown in inflation across the Eurozone (down to 2.8% in June according to Eurostat’s flash estimate) – which has pushed back the prospect of an interest rate hike – has failed to reassure investors, and volatility has prevailed. As a result, Milan ended the first trading session of July down 0.15%. The day’s key catalyst was the speeches by leading central bankers at the Sintra meeting. Of particular note were the remarks by Fed Chairman Kevin Warsh, who assured: ‘We have been an independent central bank for a very long time. We will continue to be an independent central bank today as well. And you will see no change in this regard.” In emphasising that interest rates must return to being the primary tool and that the balance sheet must be reduced, the Chairman expressed full support for the ECB’s decision to abandon forward guidance in favour of an approach based on the analysis of data and scenarios.

Against the backdrop of the Middle East, with the talks in Doha between the United States and Iran taking centre stage, President Trump reassures: ‘Iran’s denuclearisation is progressing well. They’ve had some very positive meetings and we’ll see.’ The possibility of a toll for crossing the Strait of Hormuz remains, and in this context, oil prices continue to fall: Brent crude is at $71.4 per barrel (-2%).

Wall Street is down, with the markets starting the new month in negative territory, following strong gains in the first half of the year. The main indices closed Tuesday’s session higher, marking a positive first half of the year. In the first six months of the year, the Dow Jones rose by 8.9 per cent, recording its best first-half performance since 2021. The S&P 500 index rose by 9.6 per cent and the Nasdaq by 12.8 per cent. Rises in semiconductor and artificial intelligence-related shares drove the stock market, and Tuesday’s gains were partly due to growth in shares within the sector. Indeed, a record rally in the chip sector added 2,000 billion dollars to the combined market capitalisation of Micron, Intel and Advanced Micro Devices in the second quarter of 2026. The market’s attention is focused on the speech in Sintra by Federal Reserve Chair Kevin Warsh. Since taking the helm, Warsh has been committed to revitalising the US central bank by setting up new task forces to conduct an in-depth review of the Fed’s current strategies with a view to defining a modern monetary policy. Market participants also anticipate that the central bank may be poised to raise interest rates as part of its ongoing fight against inflation.

Against a backdrop of continued geopolitical uncertainty, the market is once again focusing on fundamentals – macroeconomic data in particular – to gauge the future direction of central banks. The eagerly awaited European inflation figures showed a sharper-than-expected fall (to 2.8 per cent), further easing the pressure on the ECB to raise interest rates in order to control prices. In the run-up to the release, data from France (where inflation fell from 2.4% to 1.8%), Germany (from 2.6% to 2.3%) and Italia (from 3.2% to 3%) had already shown signs of a slowdown, as had European inflation. David Pascucci, a market analyst at XTB, points out that ‘the Italian figure is interesting because it shows a fall in prices across all consumer sectors, with the exception of energy prices, which were in fact expected to fall due to the recent drop in oil prices. This means that the fall in oil prices has not yet been passed on within the economy, so we will effectively have to wait a few more months before seeing the expected fall in inflation resulting from the drop in oil prices’. The key issue will be to understand what level oil prices will stabilise at in the coming weeks – whether around $90 or, as seems likely, around $70–80 – which could lead ‘to a sharp fall in inflation and the ECB potentially cutting rates again’, concludes Pascucci.

On the main Milan stock exchange , Nexi’s share price surged, closing 6.44% higher on the back of sector-wide movements among its US competitors, such as Fiserv andGlobal Payments. Defence shares (Leonardo +3.9%, Fincantieri +1.56%) on the back of the strong performance of the European sector following the UK government’s allocation of an additional 15 billion for the armed forces. Buying was seen in Unipol (+3.9%), which benefited from a positive report by Intermonte. At the bottom of the index, however, Saipem (-3%) and St (-2.9%) slipped.