Escalating tensions in the Middle East, particularly threats to energy assets and potential disruptions to global supply, are weighing on European stock markets. The pressure comes as Wall Street also retreated late Tuesday after the Federal Reserve held interest rates steady and raised concerns about ongoing economic uncertainties, including an upward revision of inflation estimates. Today, the European Central Bank and the Bank of England are also scheduled to announce their policy decisions.
Following an Israeli attack on Iran’s South Pars gas field – the world’s largest – Tehran responded with attacks on a key gas hub in Qatar and a barrage of missiles targeting Riyadh, Saudi Arabia, with debris landing near a refinery. Former U.S. President Donald Trump has threatened to strike Iranian gas facilities should Tehran continue attacks against Qatar. The heightened tensions have fueled a rally in oil prices.
Against this backdrop, the FTSE MIB in Milan is trading lower, mirroring declines across the broader European continent. The situation underscores the sensitivity of global markets to geopolitical risks and their impact on energy prices.
Inwit Shares Plummet in Milan Trading
In Milan trading, Eni is bucking the downward trend, supported by rising crude oil prices and the presentation of its industrial plan to 2029. Energy stocks are largely holding steady. However, Inwit is experiencing a significant decline following a joint venture between Telecom Italia and Fastweb to build 6,000 new cell towers, which analysts believe could weaken Inwit’s market position. Iveco Group is holding its ground after a dividend payout exceeding expectations following the sale of its Defence division to Leonardo – Finmeccanica.
Oil Prices Surge, Natural Gas Approaches €70
Oil prices are sharply higher, with Brent crude reaching $115 per barrel and West Texas Intermediate (WTI) trading around $96. Natural gas prices are also climbing, approaching €70 per megawatt-hour. Gold is losing ground amid expectations of potential interest rate increases. The euro/dollar exchange rate is relatively stable around 1.14, while Bitcoin is edging towards the $70,000 threshold.
Tokyo Closes Down 3.38% Amid Middle East Concerns
The Japanese stock market closed sharply lower due to surging oil prices following the latest attacks on energy infrastructure in the Middle East. Weakness on Wall Street overnight also dampened investor appetite. Losses were led by the electronics and semiconductor sectors, with the Nikkei closing down 3.38% at 53,372.53 points. The Bank of Japan maintained its benchmark interest rate at 0.75%, while cautioning that rising oil prices warrant attention regarding underlying inflation. Economic data showed a decline in private sector machinery orders in January and a 12.5% drop in manufacturing orders, while industrial production rose 4.3% in January.
