Italian Markets Tumble as Political Uncertainty Persists

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Italian markets fell sharply on Tuesday as protracted political uncertainty drove traders and investors to sell the country’s bonds and stocks.

Italy has not had a new government since elections in March. But in the past week, the country’s politics took on a new level of unpredictability. A populist coalition that had been set to form a government nominated a euroskeptic economy minister, but the proposal was vetoed by Italy’s president, who subsequently named a technocrat to take temporary charge instead.

The whirlwind developments — which leave open the prospect of early elections and the formation of another populist alliance — has hammered financial markets.

Italy’s benchmark stock index fell nearly 3.7 percent at one point, and the country’s debt sank in value. The yield on Italy’s main 10-year bond rose to its highest level in more than four years, spiking as high as 3.42 percent at one point in morning trading in Europe.

Highlighting investors’ unease toward the country’s debt, the “spread” between Italian bonds and their German counterparts widened to the highest point since July 2013.

And in a sign of the widening concern over the turmoil in Italy, Europe’s fourth-largest economy, the euro also fell to its weakest value against the dollar in nearly a year.



Source : Nytimes