Stock markets fall as oil prices rally and a storm hits the tech sector
Decisions from the Fed, the Bank of England and the Bank of Japan are expected this week. In Milan, oil stocks are performing well, 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. Risk aversion is also being fuelled by the renewed 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.
The FTSE MIB on the Milan Stock Exchange is thus under heavy selling pressure and is posting the worst performance amongst continental stock markets.
On the monetary policy front, the market is pricing in a 25-basis-point rate rise by the Federal Reserve on Wednesday (an outcome 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. As for artificial intelligence, the call for a slowdown in the development of models to avoid the risk of losing control over them has been echoed, amongst others, by the founder of Anthropic, Dario Amodei, and the head of OpenAI, Sam Altman. The dangers were, however, played down by the US President, Donald Trump, who spoke of ‘negative forces’ seeking to slow down the development of the technology, emphasising that ‘whoever wins the AI challenge wins it all’.
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 firms and digital services companies such as SAP and Capgemini are regaining ground, having for months been regarded as among the biggest losers following the advent of artificial intelligence.
