Stock market: US-Iran breakthrough pushes Europe to new highs; Milan breaks through the 52,000 mark
Fears over tariffs resurface at the close, and the Milan stock exchange slows to +0.7%
The breakthrough between the US and Iran, the imminent reopening of the Strait of Hormuz, the rally in SpaceX (which is driving the global tech sector) and the sharp fall in oil prices, which has suddenly eased inflationary pressures (and thus fears of a rate hike). European markets, albeit in a mixed state, hit new records on the Euro Stoxx 600 and are thus celebrating the first real sign that the crisis in the Middle East could come to an end thanks to a peace agreement between Washington and Tehran, with the signing expected shortly and the next 60 days set aside to negotiate the final details on Iran’s nuclear programme. However, towards the close, the indices slowed somewhat due to fears of a trade war this time, with Donald Trump having already threatened, ahead of the G7 summit in France, 100% tariffs on wine if Paris does not scrap its digital services tax. Meanwhile, anticipation is also growing for Kevin Warsh’s debut at the Fed to see how he will shape his tenure (although no surprises are expected on interest rates).
The Italian stock market is also celebrating, with the FTSE MIB index continuing its rally for the third consecutive session and breaking through the 52,000-point barrier for the first time, before pulling back to close just under +0.7%. On the podium are Ferrari (+4.1%), also boosted by analysts, Stellantis (+3.3%) and BPER (+3.3%) among the banks at the centre of the banking shake-up. Weighing on the market, however, were Avio (-5.1%) and oil companies in the wake of the fall in crude oil prices, such as Eni (-4.7%) and Tenaris (-1.9%). UniCredit rose by 1.7% as it grapples with the takeover bid for Commerz, which is set to enter an extension period of a further two weeks shortly.
On the foreign exchange market, the euro has strengthened to $1.1603 (from $1.1581 at Friday’s close). The single currency is also worth 185.81 yen (from 185.5), whilst the dollar/yen exchange rate stands at 160.1 (from 160.2). Natural gas prices plummeted, falling by over 9% to 42.4 euros per MWh. Bitcoin also rose, gaining over 2% to 66,590 dollars. Finally, the thaw in US-Iran relations is having an impact on oil, with July WTI down to $80.6 per barrel (5%) and August Brent at $83.1 (-4.8 per cent).
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