Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a1123623

FTSE slumps as Italy crisis hits European markets

FTSE 100 caught by sell-off in European markets as investors take fright at prospect of fresh elections in Italy.

 
FTSE slumps as Italy crisis hits European markets
 

The FTSE 100 has fallen into the red, with the index caught up in a Europe-wide sell-off sparked by Italy's political crisis.

The UK blue-chip index fell 102 points, or 1.3%, to 7,628, as investors took fright at the prospect of fresh elections in Italy that could become a de facto referendum on euro membership.

Italy's FTSE MIB stock market fell 2.6% after president Sergio Mattarella set the country on a path to fresh elections after blocking attempted coalition partners Five Star and the League's choice of finance minister.

Mattarella has appointed former International Monetary Fund economist Carlo Cottarelli as interim prime minister ahead of another poll.

Other European markets were also hit. Spain's Ibex was down 2.2% ahead of a likely confidence vote on prime minister Mariano Rajoy on Friday.

Germany's DAX 30 fell 1.2% and France's CAC 40 traded 1.1% lower.

'Stock markets in Europe are getting hammered today as political uncertainty in Italy and Spain has soured sentiment,' said David Madden, market analyst at CMC Markets UK.

'Italy has named Carlo Cottarelli as the caretaker prime minister, but traders are nervous about the next general election, which could be as early as August. Anti-euro sentiment is growing in Italy, and this has shaken investor confidence.'

Banks were hit hardest by the FTSE 100's slump, with Royal Bank of Scotland (RBS) down 3.4% at 280p and Barclays (BARC) 3.1% lower at  199.9p.

On the FTSE 250, Dixons Carphone (DC) plunged 19.4% as the electrical goods retailer warned on profits, saying the UK electricals market was likely to shrink this year.

That will serve as a blow to Steve Davies, a key backer of the company, with 3.9% of his £1.3 billion Jupiter UK Growth fund held in Dixons Carphone, and 3.7% of his £66 million investment trust of the same name. 

Frederik Nassauer meanwhile holds 3.8% of his £245 million Standard Life Investments UK Equity High Alpha fund in Dixons Carphone.

6 comments so far. Why not have your say?

Nick-

May 29, 2018 at 12:43

The usual reaction from FTSE 100. Everything is negative news. What Italy got to do with us? We are Brexiting!

report this

Alan Anderson

May 29, 2018 at 17:34

The advice from Parliament is that we should stay on the Titanic. It's unsinkable.

report this

Novgorod

May 29, 2018 at 17:40

Another year another crisis in the eurozone. One day one of these endless crises will rip the thing apart with dire consequences for the markets.

Last year it was Catalonia threatening to break away and cause constitutional havoc in Spain - has that one really been put to rest? Or just another corse waiting to be resurrected given the right catalyst?

Now we have Italy with a eurosceptic coalition that is being blocked by President Mattarella because he won't accept their choice of finance minister. That's a gamble that could backfire badly. Polls suggest the League and Five Star could pick up even more votes when the elections are held again. Of course much could change in the meantime - but now they can campaign on the election being stolen, democracy ignored and cite it as proof that Italy is little more than a Franco-German colony. It's a populists dream ticket.

Had he let the coalition government go ahead I reckon it would have fallen apart within six months as it would be a bit like Jeremy Corbyn and Jacob Rees-Mogg forming a government. There's a chance disillusioned Italians might have voted for something more moderate next time around given the radical alternative imploded.

report this

chazza

May 29, 2018 at 18:18

Novgorod,

I agree with your last 2 paragraphs (and with Varoufakis in Guardian and on BBC Today). I was entirely composed about the Liga-5 Stelle coalition, convinced that it would fall apart by the first Cabinet meeting. I suspect that Conte thought so too, which is why he so gratefully seized the way out that Mattarella so dutifully preferred. But hey, this is Italy - governmental crises have been the norm while a remarkable institutional stability has reigned. I am not yet convinced it will be different this time.

And I am not betting that 'one of these endless crises will rip the thing apart'; these 'crises' serve as spurs to the reforms that must come, however much the German finance ministry resists them.

So I'm still much more worried by th threat of Brexit to my wealth than by ructions in Italy. I remain underinvested in UK, and overweight in Eurozone (and Asia).

report this

CT

May 29, 2018 at 19:47

Ahh, the wonderful Eurozone full of highly paid unelected bullying bureaucrats disliked and distrusted by the common people but defended, against democratic vote, by a bunch of fearful unpatriotic remainers. They desperately need our £40 billion and should show us some respect.

Perhaps Italy will take the firm line we should have taken. Brussles would have buckled long ago.

report this

Nick-

May 29, 2018 at 21:44

I do remember in the late 1970s a caricature in a newspaper showing a German cow being milked by a Frenchman, a Spaniard and an Italian. Since then, of course, more freeloaders joined the queue to milk the same cow.

One may ask, what do the Germans get out of this? Surely they would be far better off by shaking the whole lot of them off for good.

It looks as if the Germans cannot shake off their optimistic culture by thinking and mistakenly believing that they can make good hard working disciplined Germans out of those living on the shores of the Meditarian sea.

It is the Germans who should do an exit and leave the rest to carry on arguing among themselves. Then one may ask what will happen to the Greek and Italian debt mountains without the German tax man's help. The World Bank would not like that.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

More about this:

Look up the funds

  • Jupiter UK Growth
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Standard Life Inv UK Equity High Alpha
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • Royal Bank of Scotland Group PLC (RBS.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Barclays PLC (BARC.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Dixons Carphone PLC (DC.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

  • Jupiter UK Growth (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Steve Davies
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Sorry, this link is not
quite ready yet