Stock market: the spectre of interest rates weighs on Europe; Milan (-0.1 per cent) holds its ground on the defensive
Oil prices surge as tensions escalate in the Middle East; Treasury hits its highest level since 2023
(Il Sole 24 Ore Radiocor) - European stock markets closed below par (Milan -0.13 per cent, Paris -0.49 per cent, Frankfurt -0.69 per cent, Amsterdam and Madrid flat, London -0.5 per cent), after the ECB decided to raise interest rates by 25 basis points, as widely expected, with inflation remaining the key focus. ECB President Christine Lagarde gave no specific indication of the Eurotower’s next moves on rates – “we have not discussed any possible future path for rates, nor the probability of this or that decision,” she said – but the market now “expects” another rate hike in December. Following the ECB’s decision, yields on eurozone government bonds rose to their highest levels in several years: the yield on the 10-year Bund once again hit a 15-year high – a level it had been hovering around for some time – rising to 3.49 per cent, a threshold not seen since April 2011; the benchmark BTP, maturing on 1 July 2036, rose to 4.35 per cent (4.26 per cent at the open) – its highest level since November 2023 – with the spread over German bonds standing at 86. Spanish Bonos also hit a high not seen since 2023 (3.95 per cent). US Treasury yields also continued to rise, with the 10-year yield reaching its highest level since 2023 at 4.908 per cent. The yield on 30-year bonds, meanwhile, jumped by 0.06 percentage points to 5.35 per cent, the highest level since 2007. All this is taking place against a backdrop where, as Lagarde also explained, the conflicts in the Middle East and Ukraine are pushing energy prices even higher, which could keep “overall inflation well above target until the first half of 2027”. Crude oil prices continued to rise today, after the Wall Street Journal reported that senior White House advisers had discussed with President Donald Trump the possibility that the war with Iran could drag on even beyond the inauguration of the next president in January 2029. As a result, Brent crude surpassed $105 per barrel to reach $105.85 (+4.6 per cent), whilst WTI climbed back above $100 to $100.80 (+4.5 per cent). On the Milan stock exchange, Lottomatica is rallying again (+5.44%) a week after the announcement of its merger with Cirsa. Leonardo (+2.85%) and Inwit (2.25%) are also performing well. In the banking sector, Intesa Sanpaolo closed flat (+0.09%) after shareholders gave the green light, by an overwhelming majority, to the capital increase to fund the public takeover bid for MPS (+0.55%). For its part, the Siena-based bank has filed documents with Consob relating to the two voluntary public offers for Banco BPM (-0.06 per cent) and Banca Generali (+0.38 per cent). In the foreign exchange market, the euro/dollar exchange rate was little changed at 1.1625 (from 1.1639 at the open and 1.1626 at yesterday’s close), whilst the euro/yen stood at 179.06 (from 178.68 and 178.74) and the dollar/yen rose to 154.02 (from 153.53).
Ars
