Italian domestic politics hits shares across Europe
Fiona Cincotta May 29, 2018 9:40 AM
Italy’s unsettled domestic politics was spilling into the London market after three days of rest and affecting the start of trading Tuesday morning with the FTSE 100 opening down 0.8% at 7,668.42. The euro-zone’s third largest economy has been struggling to form a full government since elections in March with coalitions forming and falling apart several times which is likely to end up with a new election being called in September.
Italy’s unsettled domestic politics was spilling into the London market after three days of rest and affecting the start of trading Tuesday morning with the FTSE 100 opening down 0.8% at 7,668.42.
The euro-zone’s third largest economy has been struggling to form a full government since elections in March with coalitions forming and falling apart several times which is likely to end up with a new election being called in September.
Euro under pressure as crisis engulfs Italy
The euro was looking frail, trading at a 6-month and heading lower against major currencies as Italy’s domestic strife cast a dark cloud over Italy’s relations with the EU.
At the beginning of the week the country’s president refused to accept a euro-sceptic as economy minister and instead appointed Carlo Cottarelli, a former Monetary Fund official to the position of interim prime minister.
The feud at the helm of Europe’s third largest economy prompted a selloff on Italian markets on Monday and continued on all main European bourses Tuesday morning. The pound is not in a much better shape this morning, dropping to multi-month lows against the dollar, yen and the Swiss franc.
Oil under pressure as Saudi and Russia discuss potential output hike
Oil prices are heading lower as markets brace themselves for the option that Saudi Arabia and Russia, the two largest producers of black gold, might increase production by 1 billion barrels a day between them to cover a potential shortfall.The two oil big hitters started having discussions about pumping more oil as Iran, member of the oil cartel OPEC, heads for potential export problems in the wake of intensified US sanctions against the country initiated by President Trump.
Fellow OPEC member Venezuela could also end up facing sanctions from the EU over claims that its recent election was neither free of fair which could potentially result in production problems and less oil leaving the country.
BP and Shell shares both took a hit this morning, trading down 1.3% and 1.1%, respectively, as traders kept an eye on the declining oil price.
Banking shares in focus over RBS sale talks
The UK government is looking into selling a relatively small stake in the Royal Bank of Scotland but a stake that could be worth several million pounds.
The Scottish lender is mainly government owned with a 70% stake being held by the state and could see about 10% being sold later this year.
Banking stocks did not take the news too well and both RBS and Barclays responded with declining prices.
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