Stocks recover their poise as Italy concerns abate
LONDON — Stock markets recovered their poise Wednesday amid hopes for a resolution in Italy’s political turmoil that may put a halt to talk of another election this year.
KEEPING SCORE: In Europe, Germany’s DAX climbed 0.6 per cent to 12,748 while the FTSE 100 index of leading British shares rose 0.3 per cent to 7,654. Italy’s FTSE MIB was the region’s standout, jumping 2 per cent to 21,180. The CAC 40 in France though, underperformed, trading 0.4 per cent lower at 5,415. U.S. stocks were poised for a solid open, with Dow futures and the broader S&P 500 futures up 0.5 per cent.
ITALIAN UNCERTAINTY: The main focus in financial markets this week has been Italy with fears growing that a political impasse could lead to another general election that could in effect become a referendum on the pros and cons of the country’s use of the euro currency. However, on Wednesday, hopes were raised that an election could be avoided after Italy’s premier-designate, Carlo Cottarelli, said “new possibilities” had emerged to form a government based on the outcome of the March 4 vote, and that he wanted to give the option time to mature given the negative market reaction to the prospect of new elections. Efforts to create a so-called “political” government failed over the weekend after President Sergio Mattarella vetoed an economy minister proposed by the 5-Star Movement and League, the two big vote-getters in March which had come together to form a populist alliance.
ANALYST TAKE: “If a government can be formed that receives the stamp of approval from Mattarella and is therefore seen as not posing a threat to Italy’s place in the eurozone, then this will come as a relief to markets in the near-term,” said Craig Erlam, senior market analyst at OANDA.