Milan leads European sell-off as energy costs and Stellantis troubles weigh
The Italy Stock Exchange closed sharply lower on Friday, with the FTSE MIB index dropping 1.6% to 51,545 points — the steepest decline among major European markets. The selloff rippled across banking, insurance and utility stocks, while mounting concerns over energy prices and Middle East tensions pushed Italian government bond yields higher.
Stellantis hit hardest on production woes
Automaker Stellantis led the losses, sliding 5.2% to reach its lowest level since October 2014. The Italy-based automotive group has now lost more than 55% of its value since January.
The drop follows a series of production stoppages at Italian plants. The Mirafiori facility in Turin — where the Fiat 500 electric and hybrid models are assembled — suspended operations for a seventh day in September due to supply chain problems. Stellantis has scaled back its production targets for the site to approximately 60,000 vehicles this year, down from initial ambitions of 100,000–120,000 units.
Analysts at Morgan Stanley downgraded Stellantis to "underweight" in recent days, citing weak North American performance and intensifying Chinese competition. Berenberg followed with a ratings cut of its own. The stock remains among the most shorted on Piazza Affari.
Banks and insurers dragged lower
Financial stocks bore the brunt of the selling. UniCredit fell 3%, Intesa Sanpaolo lost 2.1%, and Banco BPM declined 2%. Smaller lenders BPER (-1.7%) and Monte dei Paschi di Siena (-1.5%) also weakened.
The insurance sector fared little better, with Unipol shares dropping 2.7% and Generali sliding 1.9%.
Rising government bond yields added pressure. The spread between Italian 10-year BTP bonds and German Bunds widened to 91 basis points, with the Italian yield climbing to 4.43% — up from 4.34% earlier in the month.
Higher yields can bolster bank margins through improved net interest income, though they also reduce the value of existing bond portfolios held by lenders.
Energy prices squeeze utilities
Utilities came under pressure as European gas prices surged. The Dutch TTF benchmark — Europe's key gas trading hub — jumped 4.1% to €79.52 per megawatt-hour, extending a monthly gain of more than 25%.
A2A shed 2.6% and Enel lost 2%. The energy-heavy weighting of Italian utilities left them particularly exposed to the rally.
Households face the fallout: analysts estimate average annual energy bill increases of €515 for a typical family compared with 2025, with some forecasts suggesting rises of €877 when fuel costs are included.
The gas price surge stems from multiple factors: Middle East conflict threatening supply routes, European storage levels at just 68.5% capacity, and strong liquefied natural gas demand from Asia. Italy has fared better on storage, with tanks at 84% full, compared with 55% in Germany.
Tech bucks the trend
A handful of stocks moved against the tide. Chipmaker STM gained 2.3% — the day's best performer — while cable manufacturer Prysmian added 0.6%. Luxury names were mixed: Brunello Cucinelli rose 0.6%, but Moncler fell 1.6%.
The broader Stoxx 600 index dropped 1%, with Madrid down 1.4%, Paris and Frankfurt each losing 1.3%, and London falling 1.2%.
Oil prices also pushed higher, with WTI crude up 1.4% to $103 per barrel and Brent near $105. The combination of rising energy costs and central bank policy tightening has revived concerns about inflation across the eurozone.
