THE ITALIAN JOB
As Europe wakes up this morning to the none too invigorating reality of the deadlock in Italian general elections, with the center-left coalition of Pier Luigi Bersani failing to secure a majority in both houses of the parliament, the center-right Berlusconi alliance coming closely after, a popular protest movement led by a famous comedian taking 25% of the parliamentary seats and the ruling technocratic bloc responsible for the hated austerity measures having no chance to stay in power, Italian financial markets nosedive steeply, dragging down with them the rest of the continent.
Italy's FTSE MIB index plummeted 4.7%, while London's FTSE 100 went down 1.5% and share markets in Frankfurt and Paris also fell more than 2%. The yield on Italian government bonds rose sharply, meaning that the markets are more cautious of lending to Italy.
On the forex front, EUR/USD is trading at 1.3088 at the time of writing, thus climbing 0,26% in comparison with the previous close, but most analysts are predicting the downhill tendency for the pair. A Société Générale expert goes so far as to suggest that 1.3000 will be the key level for EUR/USD and some real momentum is in store for further depreciation of the bloc currency.
Against the Sterling the Euro is currently performing abysmally, trading negatively at 0,8610.
The Italian electoral impasse has its financial repercussions felt far beyond the Apennines. In New York, the Dow Jones Industrial Average plunged 1.55% and Asian markets lost between 0.7% and 2.2%.
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