Stock markets: a perfect storm amid a crude oil rally and a tech crash. Treasury yields at 5 per cent
Decisions from the Fed, the Bank of England and the Bank of Japan are expected this week. On the Milan stock exchange, oil shares are up, whilst technology shares are down. The dollar is strengthening.
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(Il Sole 24 Ore Radiocor) - European stock markets are falling as investors await decisions from central banks, whilst calls to slow the development of artificial intelligence – coming from the heads of companies in the sector – are casting doubt on the prospects of a sector that has fuelled the stock market rally. However, risk aversion is being fuelled above all by the turmoil in the markets caused by the rise in Treasury yields to over 5 per cent and the rise in oil prices, now well over $100 a barrel due to developments in the war in the Middle East, following fresh attacks in the region and as the Iran-backed Houthi rebels advance along the Yemeni coast. On the monetary policy front, the market is betting on a 25 basis point rate rise by the Federal Reserve on Wednesday (a move deemed 87 per cent likely according to CME FedWatch data), whilst on Thursday the Bank of England is expected to maintain the status quo, albeit with a split vote. Finally, on Friday, the Bank of Japan is expected to tighten policy as anticipated.
The FTSE MIB on the Milan Stock Exchange is under heavy selling pressure and is posting the worst performance amongst European stock markets.
Wall Street in the red. Treasury yields at 5%
Wall Street is trading in the red. The Nasdaq, in particular, is under pressure after several top executives from artificial intelligence firms called for a slowdown in the development of this revolutionary technology, due to growing security concerns. The latest developments in the oil market are also weighing on the market. Nvidia Corp , a leading company in the AI sector, is losing ground, as is Broadcom, Advanced Micro Devices , Intel and Marvell Technology . Yields on 10-year Treasuries have reached 5 per cent for the first time since 2023, due to instability in the Middle East. Ten-year bonds help determine borrowing costs for consumers and businesses. At present, yields stand at 5.002 per cent, up 2.7 basis points on yesterday.
Oil shares up, tech shares down
Turning back to the equity market, amongst the leading stocks on the Milan stock exchange, oil companies are standing out, led by Eni . There was also buying interest in Campari , thanks to positive ratings from UBS and Morgan Stanley, and Diasorin , whilst the technology sector is in the red across Europe: at the bottom of the FTSE MIB are Stmicroelectronics and Prysmian , which is closely linked to the sector due to the infrastructure’s electrification requirements.
At European level, however, shares in consultancy and digital services firms such as SAP and Capgemini are regaining ground, having for months been regarded as among the biggest losers following the advent of artificial intelligence.
