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Rome Rumbles Reverse Rebound Attempt

Published 28/05/2019, 14:55

European Equity Market Handover: Stock market snapshot as of [28/5/2019 2:13 PM]

  • A dearth of new developments on the U.S.-China trade front increases focus on a confluence of events in Rome
  • Chiefly, these are widening coalition fractures, a strengthened Northern League following EU elections and a European Commission triggered by Italy’s failure to follow debt and budgetary prescriptions. A multi-billion euro fine may follow
  • Italy’s volatile yields are back on the rise. The closely watched 10-Year rate has added more than 184 basis points since the end of last week to stand around 2.70%. It peaked at 2.8% a fortnight ago
  • Markets are thereby set to go back in thrall to Italian yields after their elevation a year ago coincided with some of the most eye-catching European stock index whipsaws for years
  • Germany’s benchmark yield spread to Italy’s duly widens. The U.S. Treasury rally gets fresh legs, sending the 10-Year rate to a 19-month low
  • Still, a surprise swing higher in an EU economic confidence gauge, earlier—with weak trimmings—helps keep a floor under shaky indices
  • Like some European cash markets, S&P 500 mini futures were flirting with positive territory near Wall Street’s open

Corporate News

  • Shares in Italy’s fragile banks have slumped, including a 3% drop by FinecoBank (MI:FBK) and weakness across other large lenders like Mediobanca (LON:0HBF), UniCredit (LON:0RLS) and Intesa Sanpaolo (LON:0HBC)
  • Persistent contagion fears return, weighing heavyweights further afield like Societe Generale (LON:0J6Y) which was down about 2% a while ago
  • Fiat (LON:0QXR), whose merger news offered positive global market distraction on Monday adds a little more to double-digit percentage gains a day earlier. This helps the car & parts sector to a second positive session too
  • Deepwater contractor Seadrill could be among the sharpest S&P 500 fallers at open, as it tumbles 15% in pre-market deals following a brokerage downgrade

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.

Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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