Elections, Giorgia Meloni does not scare finances: markets without shocks

Don’t panic in the markets for the victory of the centre-right led by the Brothers of Italy. Markets shrugged their shoulders and analysts explained that “there is no case of Italy”. Investors, on the other hand, were more appreciative of the fact that a clear majority dropped out of polls. Thus, the bogeyman of the dissemination and flight of capital, brandished by the left without concrete arguments, had no effect. Milan (with London) yesterday was the only financial center to close with a plus sign (Ftse Mib + 0.67%), while the rest of Europe remained negative worried about a possible recession caused by the energy crisis and the aggressive policy of the ECB, confirmed by President Christine Lagarde. And it was precisely the words of the head of Eurotower that provoked tensions in the public bond market and boosted the spread between BTPs and Bunds, which closed at 242 points, the highest since May 2020, compared to 229 at the opening. Translated: in the secondary market it means that the 10-year rate stood at 4.516% against 4.41% at the opening after reaching the highest level since September 2013. Movements more linked to the international situation, fears of recession and words from the head of the o European Central Bank, which sent an alert to the markets with the possibility of further interest rate hikes.

Nothing compares to the financial storm that erupted in May 2018, on the eve of the birth of the green-yellow government. Yesterday, therefore, the markets fearlessly discounted the victory of the Brothers of Italy. There could be an increase in volatility in the short term, analysts explained, more linked to the composition of the government that leader Giorgia Meloni has always assured in terms of skills and abilities. Markets will be keeping an eye on the political agenda, in particular relations with Europe, the reforms called for by the NRP and fiscal policy for 2023 and beyond. But what worries me most now is the onset of recession, signaled by the drop in business confidence in Germany, which in September saw the Ifo index at 84 points compared to 88 in August, a drop more than expected. And on that trail comes oil that struggled to maintain $77 a barrel and gas fell -6% to 173 euros per megawatt hour. Good news for consumers, but bad news for the economic climate.

Source: IL Tempo