Stock market: a volatile session in the shadow of the Fed; Milan (-0.14 per cent) driven by the energy sector
Tech storm subsides, pressure on oil and bonds
(Il Sole 24 Ore Radiocor) - A volatile session for European stock markets, which continue to navigate choppy waters, caught between pressure on energy prices and government bonds, in the shadow of the Fed and growing expectations of monetary tightening. Milan closed 0.1 per cent lower at 51,555 points, with the other major European markets also down. Oil, after a brief lull, has resumed its upward trend, with Brent crude above $108 a barrel (following yesterday’s surge to just under $110), whilst tensions in the Middle East show little sign of easing and fears are mounting over the duration of the closure of the Saudi ‘East-West’ oil pipeline. Gas prices, however, have reversed course (falling below 80 euros) on hopes of possible progress towards an energy truce between Russia and Ukraine. The pressure on bonds shows no sign of easing: the yield on the ten-year Treasury has surpassed its 2023 peak, reaching 5.04 per cent – the highest level since 2007. This is heightening tension ahead of tomorrow’s Federal Reserve interest rate decision, with investors anticipating a rise in the cost of borrowing for the first time since July 2023. Attention is therefore focused on Chairman Kevin Warsh’s press conference. “We do not expect any explicit guidance on the future outlook,” says Jens Bies of Helaba Invest, noting that “in the absence of extremely hawkish signals, some rate rises may be priced out of the market, allowing US Treasuries to recover from their high yield levels”.
On the Milan Stock Exchange, following a morning dominated by defensive stocks, buying is concentrated on energy shares, with Tenaris (+3.3%), Terna (+2.87%) and Eni (+1.75%) leading the way. Banking shares are showing a mixed picture, with Mediobanca (+1.4%) and MPS (+1.5%) on the rise, whilst the market continues to monitor developments in the corporate takeover game, with all eyes on the battle between Monte dei Paschi and Intesa Sanpaolo (-0.19%), on which the share price dynamics at Generali (+0.9%) also depend. Banco BPM (-0.4%) was weak on the day of the board meeting, which continued its review of the Siena-based bid. Unicredit (-2.2%) was down following yesterday’s summit with the German government regarding Commerzbank (-0.2% in Frankfurt). Bper (-1.66%) also performed poorly. Tech shares closed unchanged (ST flat) following the previous day’s debacle triggered by concerns over AI and its security.
In the currency markets, the euro is trading at 1.154 dollars (up from 1.153 at the open and 1.1549 yesterday). The greenback is also strengthening against the yen, at 155.12 (up from 154.9 at the open today and 154.3 yesterday). The euro has risen to 179 yen. On the energy front, November Brent futures are trading at $108.4 per barrel (+2.5 per cent) and WTI at $104.6 (+3 per cent). Gas prices in Amsterdam stand at 78.9 euros per megawatt-hour, down by more than 4 per cent.
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