The Milan Stock Exchange fell by more than 3% on Thursday, while President Mario Draghi and his government could resign.
The Milan Stock Exchange fell by more than 3% on Thursday afternoon and the cost of Italy’s debt rose again, a sign of the markets’ nervousness in the face of tensions within the government of Mario Draghi, which put in jeopardize its survival.
Around 4:30 p.m. (2:30 p.m. GMT), the FTSE MIB index lost 3.67% to 20,504.42 points, pulled down by banking stocks and thus suffering the largest decline in European markets. The fall accelerated while the 5 Star Movement (M5S), a member of the ruling coalition, confirmed that it was not voting for confidence on a text discussed in the Senate, thus compromising the maintenance of the government. Then the announcement of a meeting between Mario Draghi and the President of the Republic Sergio Mattarella caused an additional drop, going up to 4%.
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Mario Draghi assured that there would be no government without the M5S nor a Draghi-bis government without M5S, even if he has a majority to govern without this party. “There is no other Draghi government than this“, he warned on Tuesday. The spread, the closely watched gap between German and Italian ten-year interest rates, reached 220 points around 4:30 p.m. (2:30 p.m. GMT), up 6.99%, after rising as high as 224 points, according to the site. from Borsa Italiana. While the European Central Bank (ECB) had sounded the end of its monetary support for the economy, this gap had risen in mid-June to 245 points, the highest in two years, before falling again.
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Because of'”political uncertainty“, the Italian spread “reached its highest monthly level. This is exactly what the ECB is trying to avoid and it makes the task of raising interest rates more difficult.commented Markets.com analyst Neil Wilson. By way of comparison, shortly after the arrival at the controls of Italy of “Super Marioin February 2021, the spread fell below 100 points for the first time since 2015.
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«The possibility of early elections increases» and one of the consequences of the crisis is «the rise in the spread, due to political uncertainty, even if we expected an intervention from the ECBaimed at softening the blow, Equita analysts commented. The ten-year Italian rate stood at 3.36% on Thursday, up 0.23 percentage points. It had exceeded 4% in mid-June, a level not seen for eight years, while it was still at 0.50% in the summer of 2021.
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