It is a very rough start for Italian markets, following last night’s shock elections, which are likely to result in a hung government.
The benchmark FTSE MIB stock market, based in Milan, is in complete free-fall.
Photo: FTSE MIB
And borrowing costs on the Italian 10-year are shooting up.
This follows an election that seems destined to end with a hung parliament, or a very unstable coalition at best.
The significance is that Italy — which is Europe’s largest sovereign debt market — may be ungovernable, raising the risk of a disruption to the progress that has brought borrowing costs down across the periphery over the last several months.
Furthermore, the election is a gigantic slap in the face to Brussels/German/Etc., as the big victors (Silvio Berlusconi and populist Beppe Grillo) ran on explicitly anti-Brussels campaigns.
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