Trump sends markets into a tailspin; Milan limits the damage (-1.2 per cent). Oil jumps to $80
Crude oil prices are rising amid fears of a possible new closure of the Strait of Hormuz. Speaking from Ankara, Trump reiterated his stance on Iran: “We will hit them hard again tonight.” Wall Street is on a rollercoaster ride
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(Il Sole 24 Ore Radiocor) - The spectre of a new escalation in Iran is once again causing concern amongst European stock markets, all of which closed sharply lower. Thus, whilst Wall Street closed mixed, Milan (-1.22%) managed to limit its losses, falling just below the psychological threshold of 52,000 points (to 51,817), thanks to a rally in oil stocks. Losses were heavier in Paris (-2.2%) and Frankfurt (-2.3%). The focus was on the remarks by US President Donald Trump, who, speaking from the NATO summit in Ankara, described Iran as a ‘lying and sick’ country, stating that the truce ‘is over’. Following the summit, Trump reiterated his stance: “We will hit them hard again tonight”. The White House occupant’s comments sent oil prices soaring, with Brent once again reaching $80 a barrel.
And whilst the NATO summit in Ankara has drawn to a close, investors’ attention remains firmly fixed on the central banks. Anticipation is mounting ahead of this evening’s publication of the minutes of the Fed’s June meetings, whilst on Thursday it will be the ECB’s turn. The documents will offer valuable insights into individual members’ views on the future path of interest rates. The Governor of the Bank of Italy, Fabio Panetta, also commented on the matter, ruling out a massive rate hike in Europe. In particular, the governor noted that the risks of rising inflation continue to coexist with downside risks to growth, but the economy is not in the same situation as it was four years ago.
Wall Street down
Wall Street ended the day on a mixed note, against a backdrop of renewed hostilities in the Middle East that have sent oil prices soaring. The Dow Jones fell by 1.09% to 52,347.97 points, the Nasdaq rose by 0.20% to 25,870.65 points, whilst the S&P 500 fell by 0.28% to 7,482.57 points. Investors’ attention was also focused on the minutes of the June meeting of the Federal Open Market Committee (FOMC), the first chaired by Kevin Warsh, during which several Fed members raised the issue of a rate rise but subsequently supported the decision to leave rates unchanged.
On the stock market, shares in companies most exposed to fuel prices are down; one such example is United Airlines Holdings. Tech and semiconductor shares were more volatile following initial gains; among others, Western Digital and Micron Technology. Broadcom surges, following the announcement of an expanded partnership between the chip manufacturer and Apple. The multi-year agreement is worth over 30 billion dollars and represents Apple’s largest manufacturing commitment in the United States to date. One to watch Space Exploration Technologies – Elon Musk’s rocket company – is under the spotlight, having closed the previous day below its initial listing price of $150.
All eyes on tech and oil stocks on the Milan Stock Exchange
Investor interest remains high in the tech sector: The sector (+0.2%) closed largely unchanged following the previous day’s slump, when the market began to question not so much the ongoing AI revolution as the sustainability of the related business models. In the banking sector, Unicredit (-2.8%) is under particular scrutiny, having announced that the final take-up rate for the public offer launched on Commerzbank (-2.4%) stands at 17.6%. The total stake held by the bank led by Andrea Orcel stands at 47.59% excluding cash derivatives.
