Italian Elections Cause Panic Amongst Spread Betting Investors
There's a sea of red across trading screens this morning as the lack of a clear victor in the Italian elections is causing panic amongst spread betting investors.
The uncertainty that this causes is enough to make anyone nervous and we are likely to see an interim administration for a number of months before fresh elections, unless a working coalition can be formed.
As we know from our own coalition, this causes little more than continual indecision and horse trading, something that the Eurozone could really do without when it comes to the likes of Italy.
It is important to remember why Italy is so important to the survival of the euro.
A couple of years ago, Silvio Berlusconi was ousted and replaced by the technocrat leader Mario Monti, whose sole aim was to reform the country.
Unfortunately, apart from the odd bit of tax tinkering here and there, this has hardly been achieved. As a result, Italy, with its massive debt mountain, remains a ticking time bomb at the heart of the Eurozone.
One thing is clear from this election and others around Europe; smaller parties are eating their way into the mainstream parties' share of the vote.
Without a clear winner, this is making the act of governance all the more difficult which, in turn, is hampering reform efforts.
In addition, the uncertainty that's been thrown up will likely knock the Italian economy further into reverse.
The result has been a mass sell off in equities, particularly Italian and other banking stocks, the euro and pretty much any other risk asset you can think of.
In fact, an inflammation of the Eurozone debt crisis is seen as just as much of a risk for the US economy as it is for the Eurozone.
Accordingly, the Italian election concerns caused the Dow Jones to post a sharp decline last night, with the index losing 216 points to 13,784.
This morning, European stock markets are following suit, with the FTSE seeing triple digit losses, taking it to 6255, and the
DAX tumbling by 150 points.
Those clients who held onto their short positions will be delighted to see this move lower, but the jury is still out as to whether this presents a buying opportunity or whether we'll see another leg down.
Also see:
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.
By Angus Campbell, 26 February 2013
Related Reviews and Guides
A Flat-Lining Economy is Better than the Alternative
Single, double or triple dip really doesn't matter in terms of the bigger picture, because the UK economy is flat-lining. The word recession is almost irrelevant as we are neither growing nor contracting, but it makes a good...»
read more.
The Cyprus Banking and Bailout Crisis
A look at how the stock markets reacted as the Cypriot banking crisis and bailout progressed...»
read more.
King Stops GBP/USD Decline but for How Long?
The UK currency did receive a boost from Sir Mervyn as he mentioned that he thought the pound had reached a fair value following months of declines. The result? the GBP/USD spread betting market dragged itself back above the...»
read more.
Investors Brush Eurozone Crisis Aside
There will always be lots for European leaders to discuss, but investors will pay less attention to them this time as the Eurozone crisis has been brushed to one side for now. But therein lies the danger; complacency and...»
read more.
Investors Still Concerned by Italy
Even though the current stability of equity markets may not suggest that the Eurozone debt crisis is coming back to the fore, there still remains lots of political uncertainty and worry surrounding Italy. They have yet...»
read more.
Dow Jones Index Hits Highest Ever Level
Whilst some may believe that 'irrational exuberance' is already upon us, the majority are basking in the glory of easy money, expecting equities to head higher and higher. The flow of easing has provided...»
read more.
Markets Remain Supported by the Central Banks
A 'false market' is being created as economies limp on with the assistance of new cash creation rather than going through the necessary reforms to become more efficient. As long as central banks continue with...»
read more.
You are here » "
Italian Elections Cause Panic Amongst Spread Betting Investors" » There is a sea of red across trading screens this morning as the lack of a clear victor in the Italian elections is causing panic amongst spread betting investors. The uncertainty that this causes is enough to make anyone nervous and we are likely to see an...»
Return to Top