Tuesday, 29 May 2018

Fears over Italy's political upheaval spread to Wall Street after Europe's financial markets closed lower



Fears over Italy's political upheaval spread to Wall Street after Europe's financial markets closed lower.

 
The prospect of fresh elections and the possibility of eurosceptic parties strengthening their position has raised concern about the eurozone's stability.


The US Dow Jones index had shed 1.5% by midday, coming after Italy's FTSE MIB closed down 2.7% and other main markets in Europe shed well over 1%.


A sell-off in Italian bonds saw the yield on two-year debt breach 2%
It meant that short-term Italian bonds suffered their biggest one-day jump in 26 years.
Movements in bond prices are important as they affect the cost of borrowing for the government.


Italy's debt currently stands at 130% of its economic output.


The bond sell-off hit the share prices of European banks exposed to government debt, especially those in Italy. Banco BPM, Banco Generali, Unicredit and BPER Banca closed down between 5% and 6.7%.


On Wall Street, JP Morgan was down 3.7%, and Bank of America and Citigroup were just more than 3% lower. Morgan Stanley fell 5.3%.




BBC      News.