Political Uncertainty Added to Italian Woes

Italy sank into political limbo after Prime Minister Matteo Renzi announced his resignation on the back of a crushing defeat over his constitutional referendum, triggering renewed financial turbulence for Europe.

The premier was due to hand in his resignation to President Sergio Mattarella on Monday afternoon, after Renzi’s proposal to rein in the power of the senate was rejected in a referendum by 60 percent to 40 percent, with almost all votes counted. Renzi signaled that he won’t stay on to help stabilize a caretaker administration.

The euro fell to a 20-month low, while stock index futures and Italian bonds slumped as the prospect of mounting political risk buffeted financial markets. Much of the focus is on Banca Monte dei Paschi di Siena SpA, which is in the middle of a 5 billion-euro ($5.3 billion) capital raising. Its stock has fallen 83 percent this year and a third of its loan book has soured.

Bloomberg

Europe Lower on Renzi Defeat but No Panic Yet

NFP Hodge Podge

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.