EUROPE MARKETS: Italy's Political Chaos Sends European Stocks Sliding
August 09 2019 - 5:47AM
Dow Jones News
By Callum Keown
European stocks slid on Friday as Italy descended into political
chaos with Deputy Prime Minister Matteo Salvini calling for a snap
election.
The FTSE MIB dropped 2.3% as political instability returned to
Italy, with Salvini insisting the coalition government no longer
has a majority.
The Stoxx 600 fell 0.5% as other big European indices also
declined on Friday -- the DAX by 0.8% and the FTSE 100 by 0.3%.
What's moving the markets?
Salvini's call for a general election sent Italian bond yields
soaring as anxious investors ditched government debt.
The leader of the League Party called on the prime minister,
Giuseppe Conte, to begin the election process. A vote could take
place in the autumn.
Italy's main index, the FTSE MIB, also sank, leading European
stocks lower.
Barclays senior European economist Fabio Fois said a new
government led by the League could reignite tensions with the
European Union over Italy's budget, which must be approved by the
end of the year.
"The risks of a potential clash between Italy and the European
Commission should not be ruled out.
"Such a risk is heightened, given a new government will have
very little time after the snap elections to negotiate with the
commission."
The German economy was hit by more damaging data as exports
dropped a disappointing 8% year-over-year in June.
Which stocks are active?
Italian banks plunged as the government teetered on the brink of
collapse. The nation's third-largest lender Banco BPM (BAMI.MI) led
the Stoxx 600 fallers, dropping 7.8%, while UBI Banca declined 5.9%
and UniCredit (UCG.MI) slid 5.7%.
German chemical company Bayer (BAYN.XE) climbed 4.2% as it
proposed to pay $8 billion to settle more than 18,000 lawsuits
(http://www.marketwatch.com/story/bayer-shares-jump-on-report-of-roundup-settlement-2019-08-09)
because of claims that its Roundup weedkiller causes cancer.
Investors welcomed a potential settlement as the number of
plaintiffs continues to mount.
Advertising giant WPP (WPP.LN) rose 7.2% after the company's
half-year results convinced investors its turnaround was on track.
A 2% fall in like-for-like sales was better than expected
(http://www.marketwatch.com/story/wpp-comparable-sales-fall-14-2019-08-09)
and the company also eased its decline in the U.S. and stuck to its
full-year guidance.
(END) Dow Jones Newswires
August 09, 2019 06:32 ET (10:32 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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