Edward Marchesi November 5th marked a turning point for European bond markets. After days of volatility related to the US elections and concerns about technology stocks, traders witnessed a sharp narrowing of the BTP-Bund spread and a slight decline in sovereign yields.
At the same time, Wall Street's main stock prices experienced a sharp correction, pushing benchmark indices lower and even dragging down some traditionally more stable sectors, such as energy and raw materials.
BTP-Bund Spread: Evolution and Implications
At the start of the European session, the spread between 10-year Italian and German government bonds moved slightly , opening at 105 basis points, compared to yesterday's close of 104 basis points. After a rapid fluctuation, the day ended with the spread at 102 basis points, well below the 105,7 recorded on Tuesday.
This reduction highlights an improvement in the perception of Italian sovereign risk, even if the level remains above the 100 point threshold considered a more stable reference point.
Closing data detail
During the morning, the spread had reached 109,7 points, but buying pressure on BTPs was enough to bring it back to 102 points at the close.
Meanwhile, the yield on the 10-year Italian bond fell to 4,33% from 4,37% in the previous session, while the Bund remained stable at 3,25%.
Sovereign yields and European market reactions
The decline in yields was accompanied by mixed movements on other financial markets. The euro held nearly steady at around 1,123 against the dollar, while commodity prices showed signs of recovery: the price of oil in New York rose more than two percentage points, reaching $90 a barrel, and natural gas closed up 1,5% at 89,4 euros per megawatt-hour.
Meanwhile, gold rose slightly, closing at $4.155 an ounce, a sign of a return to safe-haven assets amid stock market uncertainty. Cryptocurrencies suffered sharp declines: Bitcoin fell 5% to around $76, while Ethereum lost six percentage points to $2.260.
Wall Street in crisis: impact on technology sectors
In the United States, the Nasdaq closed down 4,9%, dragged down by a sell-off in high-tech stocks. Fears of stricter regulation of artificial intelligence severely hit shares of companies like STM and Technoprobe, both down 9%. Other Italian industrial stocks also suffered: Fincantieri, Stellantis, and Prysmian lost about four percentage points, while Leonardo fell 3,4%.
Banks had a mixed performance: BPER fell 2,7% to 13,2 euros after the release of its third-quarter results, while Mediobanca fell 1,5%. Conversely, Amplifon gained 2,7% and Tenaris gradually gained 3,6% to surpass 25 euros, supported by strong quarterly results.
November 5th demonstrated how financial market dynamics are closely interconnected: a decline in the BTP-Bund spread eased pressure on government bonds, but Wall Street's deep correction kept nerves high, impacting both technology stocks and high-value assets like gold and cryptocurrencies.