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Italian equities were down sharply on Friday, as the drama of the country's fiscal plan had erupted again and led to a rise in yields on its sovereign bonds, amid fears of a conflagration that would disrupt markets between the EU and the EU. Rome.
What are the markets doing?
The FTSE MIB Italy Index in Italy
I945, -1.13%
was down 1.6% to 18,780, ready for a weekly slippage of 2.5% and its fourth consecutive weekly slump, the longest such decline since a five-week retreat ended June 8, according to FactSet data.
The Italian political turmoil dragged the pan-European Stoxx Europe 600
SXXP, -0.38%
down 0.4% to 360.17, but the index showed a weekly gain of about 0.4%. The FTSE 100 from the United Kingdom
UKX, + 0.16%
Trading was virtually unchanged at 7,024.22, despite unresolved UK woes following Brexit. The stock indicator was on track for a weekly gain of about 0.4%.
The German DAX 30
DAX, -0.29%
Meanwhile, trading fell 0.4% to 11,536.54 points, with a slight weekly advance of about 0.1%. CAC 40 in France
PX1, -0.77%
decreased by 0.8% to 5,075.39, reflecting a weekly decline of 0.4%, which would be the fourth consecutive weekly decline.
L & # 39; euro
EURUSD + 0.0786%
The last price traded at $ 1,1449, compared to $ 1,1443 on Thursday night in New York. The pound
GBPUSD, + 0.0845%
was $ 1.3018 to $ 1.3038 the previous session.
Lily: With the risk of "not agreeing" up on the Brexit, analysts believe that the trajectory of the pound sterling is uncertain.
What motivates the market?
Italy's 10-year debt yield
TMBMKIT-10Y, + 1.26%
The EU had warned Rome that its budget proposal would go against the rules in force for member countries. Meanwhile, the German paper yields of 10 years
TMBMKDE-10Y, -1.83%
at 0.402%, its lowest since September. Investors tend to turn to German bonds, or Bunds, like traders, consider them a haven during periods of heightened uncertainty in the euro zone as the country is the biggest economy of this economic bloc. Bond prices rise when yields fall and vice versa.
Earlier this week, the Italian government approved a budget bill for next year, confirming a set of expansionary measures that could lead to a sharp rise in the deficit.
The measures in the bill are expected to widen the budget deficit to 2.4% of gross domestic product. European officials fear that the real deficit is well over 2.4%.
The complete finance bill will be submitted to the Italian Parliament by Saturday.
Legislators will have to approve it by the end of the year. If this is not the case, a new EU crisis could emerge as the leaders of the 5 Star Movement against the establishment and the far-right League have pledged to keep campaign promises increased spending of the government.
A conflict could shake European markets if it intensified, warned market participants.
Investors have also closely followed the efforts of British Prime Minister Theresa May to conclude a new trade and customs pact with the EU, while Britain must resign in March. On Thursday, the month of May indicated that an extension of the current EU status in the UK could come into play due to unresolved differences between the parties.
European negotiators also monitored tensions between the United States and Saudi Arabia when Treasury Secretary Steven Mnuchin announced on Thursday that he was withdrawing from an investment conference in Riyadh in response to the government's disappearance. Saudi journalist Jamal Khashoggi, residing in the United States.
What do the strategists say?
"Although this change has not been clearly triggered, renewed concerns over the Italian budget, disappointing profits for industrial companies, still high US bond yields and the prospect of repercussions on US-Saudi relations may all contributed, "wrote Marios Hadjikyriacos. , analyst at XM, in a research note on Friday.
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