European stock markets closed the week on a sharp rise in the wake of the new scenario of détente in the Middle East and expectations of a possible end to the conflict between the United States and Iran.
Tehran announced the “complete reopening” of the Strait of Hormuz to naval traffic for the remainder of the ceasefire, a decision which caused crude oil prices to plummet and significantly improved market sentiment. The measure fits into the context of the truce between Israel and Lebanon and of the international summit on the resumption of navigation and mine clearance in the Strait, which involved the main European powers and around forty non-belligerent countries.
The development has also been welcomed positively by the United States, with President Donald Trump underlining how the negotiation process is progressing rapidly, although with some points still to be defined.
Piazza Affari stands out with a positive session that brings the index to its highest level since 2000, confirming a tonic weekly closing for the Italian market.
Macro scenario and central banks
The week was characterized by limited macroeconomic data, with operators’ attention focused above all on the new framework outlined by the International Monetary Fund and on the implications for global growth and monetary policies, in a scenario still influenced by the evolution of the conflict in the Middle East.
The Fund highlighted the risks linked to geopolitical uncertainty and the possible slowdown of the world economy, offering indications on a context that remains fragile despite signs of détente. The prospects for growth and inflation are directly reflected in the expectations for central banks.
In the United States, indications are emerging of a possible reduction in the expectations of a rate cut by the Fed, while in Europe the IMF itself estimates a possible cumulative increase of 50 basis points for the ECB by the end of the year, in a framework still conditioned by the evolution of the international context and its macroeconomic repercussions.
Oil and gas in steep decline
The improvement in the geopolitical framework is immediately reflected on energy raw materials. Oil recorded a sharp decline, with Brent falling below 90 dollars a barrel.
Natural gas is also in sharp decline, with prices in Amsterdam standing at around 38 euros per megawatt hour, in the wake of expectations of a return to normality in energy flows.
The weekly performance of the stock markets
The worst performance of the week was recorded by the Frankfurt and Milan markets, which gained over 3 percentage points. Paris and Madrid also did well, rising by around 2%, while London limited the rise to half a percentage point. The ending also looks positive for the Wall Street stock market.
The best and worst in Piazza Affari
On Piazza Affari, Mediobanca and MPS (investors rewarded Lovaglio’s surprise reconfirmation as head of the Sienese bank) positioned themselves at the top of the FTSE MIB, with increases of 16.9% and 15.4% respectively. Technoprobe did well with +14%. Among the worst performers was Eni, which lost 10.9% in the wake of the collapse in crude oil prices. For the same reason, Saipem also fell -7% and Tenaris -5%.
