Mercoledì, 19 Settembre 2018

Italian-German spread narrows to 250 basis points


Milan, September 10 - European markets jumped to
three-month highs Tuesday after an apparent easing in tensions
in the Syrian conflict and even Milan, rocked by government
uncertainty, managed to show significant gains.
The FTSE-Mib climbed by 0.51% to close trading at 17,332
points while the spread between Italian and German bond rates
narrowed slightly on the day, despite growing tensions between
the two political parties in Italy's governing coalition.
The coalition was hanging by a thread Tuesday with each
party blaming the other for a looming collapse linked to
ex-premier Silvio Berlusconi's first definitive criminal
Berlusconi's People of Freedom (PdL) party warned that
Democratic Party (PD) Premier Enrico Letta's government will
fall if a Senate panel rejects PdL efforts to delay a vote to
strip Berlusconi of his parliamentary seat over his tax-fraud
Berlusconi risks losing his Senate seat under the terms of
an anti-corruption law approved in 2012, which the PdL says is
Despite the Italian uncertainty, investors were encouraged
by solid economic news from China, which showed that industrial
production rose 10.4 % in August, up from 9.7% reported in July
and above expectations of a 9.9% increase.
As well, Chinese retail sales jumped by 13.4% suggesting a
renewed vigour in the massive economy.
Meanwhile, in the Syrian conflict, investors breathed a
sigh of relief following suggestions that Syrian President
Bashar al-Assad could avoid a military attack if he were to
surrender all chemical weapons to the international community.
Further, United States President Barack Obama said that he
would put airstrikes on hold if the US itself verified the
handover of chemical weapons.
The news calmed bond markets as the spread between Italy's
10-year bond and its German counterpart narrowed to 250 basis
points by end of trading Tuesday, down from Monday's close of
256 basis points.
The yield on Italian 10-year paper closed at 4.53%.
The spread between lending rates in the two countries is
seen as an indication of investor faith in the Italian economy
and its ability to cope with a lingering recession.
On other European markets, Spain's IBEX 35 gained fully
1.96% to 8,801.50 points while Frankfurt's DAX jumped by a
dramatic 2.1% to close at 8,446.54 points.
In Paris, the CAC 40 gained 1.90% to close at 4,116.64
points, and in London, the FTSE index of leading British shares
gained 0.82% to close at 6,583.99.

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