The long-awaited report on American labor market confirmed the slowdown of the US economy, but did not dispel investors’ doubts about the extent of the next interest rate cuts by the Federal Reserve. This weighed on stock markets in both Europe and the United States, with Europe closing at the lowest levels of the day. All the main Eurozone indices recorded losses of more than one percentage point: the worst was Frankfurt, with a decline of 1.6%, while Milan closed at -1.17%. London, on the other hand, limited its losses to -0.7%.
The performance of Piazza Affari
The Ftse Mib closes down by1.2%settling at 33,276 points, at the end of a session characterized by strong oscillations. The Milanese list is weighed down by the falls of Prysmian (-3.7%), Stm (-3.3%), Mps (-3%) and Telecom Italia (-2.8%). Despite the negative trend, utilities show a good performance, with Hera in the lead (+1.25%), followed by A2A (+1%) and Enel (+0.5%). Erg also closes on the rise (+0.2%). The Btp/Bund spread stands at 142 points.
US, +142,000 jobs in August: data below estimates
The long-awaited August US jobs report fell short of expectations, with the creation of 142,000 new jobs (excluding the agricultural sector), compared to 161,000 expected by analysts. The unemployment rate fell to 4.2% from 4.3%, in line with expectations. Average hourly earnings rose 14 cents, or 0.4%, to $35.21, up 3.83% from a year earlier. The average workweek increased slightly, by 0.1 hour, to 34.3 hours. Labor force participation remained at 62.7%, 0.7 percentage points below pre-pandemic levels in February 2020.
Stock Market 12:00: Milan is trading with a minus sign
All the indices of Piazza Affari and the other main European lists are in the red, awaiting the US macroeconomic data, crucial for the Fed’s decisions. At 12 Frankfurt shows a sharp decline of 0.71%, while London is substantially weak, with a decline of 0.45%. Paris moves below parity, with a decrease of 0.56%. Piazza Affari records a fractional decline, with Milan losing 0.59%.
In Milan, the best performers include A2A with a 1.02% increase, DiaSorin with a 0.64% gain and Hera with a 0.51% increase. On the other hand, the worst performers are Banca MPS, which marks a 2.04% decline. Bper is under pressure with a strong decline of 2.03%, while Unipol loses 1.54%. Finally, Unicredit suffers a moderate contraction with a 1.41% decrease.
Stock Market 9am: General decline in Milan and Europe, today data on employment in the USA. Banks in difficulty
European stock markets open lower. Frankfurt records a decrease of 0.27%, London of 0.18%, Paris of 0.26% and Milan by 0.35%, settling at 33,568 points. The spread Btp/Bund is rising to 144.8 basis points, while the yield on the 10-year Btp falls to 3.54%.
Down with the banks in Milan
In this first part of the day, the banks are the ones in the most difficulty: Bper Bank has a decline of 1.67%, closing at 4.833 euros, follows Monte Paschi Bank from Siena, which lost 1.50%, settling at 4.974 euros. Among other declining stocks, Unipol and Unicredit both marked a decline of 1.13%, respectively at 9.61 euros and 36.415 euros, while Mediobanca fell by 1.09%, closing at 14.915 euros.
Telecom Italia loses 1.05%, with the stock stopping at 0.2363 euros. Also falling Pirelli (-1.03% to 5,382 euros), Sondrio People’s Bank (-0.87% to 6.80 euros) and Leonardo (-0.87% to 20.52 euros). Not good either Stellantis which fell 0.42% to 14.23 euros, despite the announcement of a 385 million dollar investment in the Argentine plant in Córdoba for the period 2025-2030, aimed at developing a new range of vehicles, components and engines. In the meantime, Citi has revised downwards the target price of Stellantis from 17 to 15 euros, maintaining the neutral rating, while it has raised the target on Ferrari (+0.32% to 429.7 euros) from 334 to 360 euros, with a rating that remains sell.
In the oil sector, Saipem loses 1.35% to 1.86 euros, while Eni falls by 0.61% to 14.11 euros. Eni has signed three memoranda of understanding with the Azerbaijani Socar in the sectors of energy security, reduction of greenhouse gas emissions and production of biofuels. Meanwhile, the Ministry of Energy of Kazakhstan has asked to postpone to next year the maintenance of the Kashagan oil field, scheduled for October.
US Labor Verdict Today
European stock markets thus opened in negative territory. Paris recorded a 0.26% drop, Frankfurt lost 0.27% and London also followed the bearish trend, down 0.18%.
Everyone is moving cautiously so, waiting for today’s report on labor market in the United States, a key data to assess the size of the next rate cut by the Federal Reserve and to monitor the health of the American economy, with the aim of averting fears of a recession. The unemployment rate for August is expected to fall to 4.2% from 4.3% in July, while the number of new jobs is expected to rise to 164 thousand from 114 thousand in July.
Yesterday, the data on new private sector wages (ADP) for August showed a decline, with 99 thousand jobs created, compared to 144 thousand expected and 111 thousand in July. Weekly claims for unemployment benefits were slightly lower than expected (227 thousand versus 231 thousand expected and 232 thousand the previous week). Data indicate a slowing US economy, but still resilient. Therefore, all assumptions remain open regarding the next interest rate cut by the Federal Reserve, scheduled for September 18.
Meanwhile, OPEC+, the group that includes both OPEC countries like Saudi Arabia and non-OPEC countries like Russia, has decided to postpone by two months the supply increase planned for October, due to the recent drop in oil prices.
Spread at 144 points
The spread between BTp and Bund opens slightly higher. In the early stages, the yield spread between the benchmark 10-year BTp and the German Bund of the same maturity stood at 144 basis points, with an increase of 1 basis point compared to the previous figure. On the contrary, the yield of the benchmark 10-year BTp is falling, recording a first position at 3.62%, down from 3.64% at the previous close.
