EU stock markets in the red amid tensions over the Strait of Hormuz and bond yields; Milan brings up the rear (-1.1 per cent); Wall Street down
Indices are under pressure due to rising crude oil prices, stemming from US-Iran tensions, and selling in the tech sector (amplified by the Nasdaq). Treasury yields have reached their highest level since 2007. The euro is trading below 1.16 dollars, whilst the spread closed higher at 82 points
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(Il Sole 24 Ore Radiocor) - Inflation fears linked to rises in crude oil prices, global government bond yields at record levels and tensions in the Middle East, which show no sign of abating, are keeping European stock markets on tenterhooks. Meanwhile, Wall Street is also trading lower, with the Nasdaq seeing profit-taking in the tech sector, whilst the FTSE MIB in Milan is the worst performer on the continent.
According to Donald Trump, there are currently no talks with Iran, nor are any planned, whilst ‘the naval blockade remains fully in force’ and ‘the Strait of Hormuz is open and operational’. For its part, Tehran has reiterated that the strait will remain closed until the US lifts the naval blockade and oil sanctions, unfreezes Iranian assets and ceases military operations on various fronts. This news is causing concern amongst investors and, on the one hand, is fuelling the oil rally – with Brent remaining above $90 a barrel at $91.4 (+0.5%) – whilst, on the other hand, it is triggering a surge in bond yields. As a result, by the end of the day, all the major European stock markets were down, from London (FTSE 100) to Madrid (IBEX 35), via Frankfurt (DAX 40) and Paris (CAC 40).
Wall Street falls, weighed down by Treasuries and profit-taking in tech
Wall Street is down, weighed down by a fresh rise in Treasury yields and rising oil prices following an attack on a ship leaving the Strait of Hormuz: the S&P 500 index fell by 0.66 per cent, recording its third consecutive modest loss since reaching an all-time high on Thursday. The Dow Jones fell by 0.22 per cent and the Nasdaq plunged by 1.33 per cent.
The yield on the 30-year bond reached its highest level since 2007, against a backdrop of growing concerns about inflation and the US fiscal situation. On the energy front, concerns are mounting that the Strait of Hormuz will not soon return to full operation, after the United States and Iran failed to reach a diplomatic agreement at the end of a 60-day truce aimed at ensuring the safety of shipping through the strait. Meanwhile, a Liberian-flagged cargo ship is reported to have been struck by an unidentified projectile approximately five nautical miles off the coast of Oman, resulting in one fatality amongst the crew.
St takes a tumble in Milan; Nexi and Eni lead the way
On the Milan stock exchange, at the close of trading, Nexi took the lead, pending confirmation of possible move by Stripe regarding PayPal and CDP’s moves regarding its shareholding. Oil companies are benefiting from the latest surge in crude oil prices, in particular Saipem and Eni. At the bottom of the table, the tech sector is struggling following the slump in Stmicroelectronics and Prysmian, whilst anticipation surrounding the IPO of the Chinese Unitree appears to be tempered by concerns regarding spending on artificial intelligence and the risk of a ‘bubble’, as also highlighted in an ECB report. The focus remains on the banking sector, with the CEO of Banca Monte Paschi Siena Luigi Lovaglio reportedly has not abandoned the idea of opposing the bid by Intesa Sanpaolo, despite the U-turn by Banco Bpm regarding a possible merger. Also in the red is Unicredit is also in the red, with the German government potentially considering the sale of a stake in Commerzbank, should they manage to agree on a common strategy.
