Monday’s USMCA-celebrating trading was nowhere to be seen on Tuesday, the European markets pulling back as the brewing conflict between Italy and the EU returned to the forefront of investors’ minds.
Italian Deputy Prime Minister Luigi Di Maio yesterday accused the European Union of economic ‘terrorism’, picking out European Economic Affairs Commissioner Pierre Moscovici for special criticism, claiming he purposely set out to ‘upset the markets’ following the announcement of Italy’s debt-ignoring budget.
The Frenchman also found himself responding to comments from League economic head Claudio Borghi. Borghi stated Italy would be better off outside the eurozone, an argument Moscovici rebuked by remarking that Italy knows the euro ‘protects them’.
This fresh war of words ended up doing exactly what Di Maio complained about: upsetting the markets. The DAX dropped 75 points, plunging back below the 12300 mark it had crossed on Monday, with the CAC abandoning 5500 as it fell 0.7%. As for the euro, it shed another 0.4% against the dollar, taking the single currency to a fresh 6 week nadir of €1.1503, while losing 0.1% to the pound.
The FTSE, which already had failed to properly engage with Monday’s gains, ended up slipping a further 25 points, returning the UK index to 7475. What makes that decline especially shocking is that it comes despite Brent Crude hitting $85 per barrel for the first time in 4 years, the black stuff shooting up overnight as investors anticipate the supply disruptions that will come from the USA’s sanctions on Iran.
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