Stock markets weighed down by oil and a tech sell-off, with Milan the worst performer (-1.7 per cent). Nvidia down

(Il Sole 24 Ore Radiocor) - The possibility of a slowdown in AI development, championed by the sector’s major players, is throwing forecasts for expected returns on tech investments into disarray. And it is dragging markets down on both sides of the Atlantic. Among European stock exchanges, the worst performer is Milan (-1.7%), but other markets also closed with falls of around 1 per cent, under pressure from a double rally: that of Brent crude due to tensions in the Middle East and the supply crisis, with the price per barrel now approaching $110, and the rally in government bond yields (the 10-year US Treasury yield stands at 5 per cent, for the first time since 2023). Fears over inflation are thus translating into increasingly concrete expectations of a rate hike by the Fed. Shares linked to the semiconductor sector are bearing the brunt of this, whilst analysts are wondering who will bear the brunt of the slowdown in AI, driven by security concerns regarding the latest models (voiced by Dario Amodei of Anthropic, backed by Elon Musk and Sam Altman of OpenAI).

Wall Street closed lower in the wake of the debate over the dangers of artificial intelligence. The Dow Jones fell by 0.29% to 52,421.28 points, the Nasdaq dropped by 0.56% to 26,186.41 points and the S&P 500 fell by 0.48 per cent to 7,619.95 points. The Nasdaq came under particular pressure after several top executives from artificial intelligence firms called for the pace of development of this revolutionary technology to be slowed, due to growing safety 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 from yesterday.

On the Milan Stock Exchange, the global sell-off in tech shares is dragging down Prysmian (-6.5%) and St (-7.07%). Almost all FTSE MIB stocks are in the red, from industrials to banks. Among the few exceptions is Campari (+5.5%), which is celebrating the upgrades from UBS and Morgan Stanley. MPS is down 2.91 per cent, having explained that the bids for Banco BPM (-0.92 per cent) and Banca Generali (-1.66 per cent) are at a discount when calculated prior to the OPAS by Ca’ de Sass (-1.77%). In any case, “we believe that Intesa Sanpaolo’s offer is more advantageous”, reiterate Kepler’s analysts. +0.67% for Recordati following opposition from some minority shareholders to the CVC offer.

The spread between BTp and Bund closed higher against a backdrop of a general rise in yields across the euro yield curve, driven by tensions linked to rising oil prices and the consequent deterioration in forecasts for inflation and interest rates. At the close of trading, the yield spread between the benchmark 10-year BTp and the German bond of the same maturity stood at 88 basis points, 4 points higher than Friday’s level. The yield on the benchmark 10-year BTp also rose, closing the session at 4.41 per cent, up from 4.35 per cent the previous day.

On the foreign exchange market, dollar is strengthening and is pushing the euro down towards 1.15 from 1.1596 at Friday’s close. On the energy front, Brent remains at its highest level since last May: the November contract is trading above $109 before retreating slightly. WTI is around $104. Natural gas traded in Amsterdam is also surging.