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Home / Business / Dow drops 504 points – then rallies – as Italy's political crisis triggers global sell-offs

Dow drops 504 points – then rallies – as Italy's political crisis triggers global sell-offs



Markets tumbled worldwide on Tuesday as investors feared that a growing political crisis in Italy could cause Britain to exit the eurozone two years ago.

The Dow Jones Industrial Average fell by 505 points Slight recovery and closure of 391 points – 1.58 percent – in the face of fears that the Italian crisis could bleed throughout the Eurozone.

Standard & Poor's 500-share index, technology-heavy Nasdaq Composite and Russell 2000 suffered losses on Tuesday In Italy, prices on US retailers expanded.

In the southern European countries, investors were booted out of bonds, and Italian banks and stock markets were worried that Italians might lose the euro. The equity markets in Italy and Spain were hit hardest as the stock market fell in the region of 2.5%. The Italian UniCredit, one of the most important banks, saw a sharp decline in prices.

European currencies lost ground against the dollar, while the major stock indices ̵

1; Stoxx Europe 600, the British FTSE 100 and the German DAX – lost ground.

"We have a lot in mind," said Chris Gaffney, president of EverBank World Markets. "The fear is that the next elections in Italy will strengthen the Eurosceptics and lead to a call on Italy to leave the European Union."

The Dow has dropped 1.45 percent. The S & P 500 is currently slightly positive in 2018.

Financial markets were hardest hit in the US markets: JPMorgan Chase fell 4.2 percent, followed by Goldman Sachs at 3.4 percent and American Express at 3.3 percent in late-day trading. Coca-Cola was the only ray of hope in the Dow that squeaked just above the flat line.

Most of these declines were driven by the sharp decline in 10-year US Treasury yields below 3% as demand rose. Returns work inversely to the price of a bond. [1080510] The 10-year Treasury yield is one of the world's most heavily monitored financial actions, along with the oil, gold and US dollar exchange rates. Many see the 10-year term as a proxy for longer-term growth and inflation expectations and a signal of where the US economy is headed.

Ten of eleven stock market sectors were in negative territory at 3pm. Tuesday, real estate and utilities surpass the rest of a sagging market. The worst performers were financials, industrials, materials, healthcare and consumer staples.

Investors fear that Italy could become another Greece, requiring rescue operations by the International Monetary Fund and the European Central Bank between 2010 and 2015. Italy's economy is Europe Most of the problems on the market today stemmed from the fact that Moody's on Friday threatened to downgrade Italy's credit rating. Wayne Wicker, ICMA Retirement Corporation's chief investment officer, said the downgrade has led to a rise in Italy's borrowing costs and increased national debt.

Italian President Sergio Mattarella blocked the formation of a coalition government on Sunday Prospects of a populist coalition spurred a withdrawal from the eurozone, with some having synchronized the movement "Quitaly" and "Italexit" in a game on Brexit from its neighbor to the north.

Markets were down the line with the Chicago Board Options Exchange Volatility Index, popularly known as VIX, jumped.

Billionaire George Soros added to the agitation the hedge fund manager and philanthropist said he was worried that the world might face another "major financial crisis"

] "The European Union is in an existential crisis. "Soros said in prepared remarks at the annual meeting of the European Council on Foreign Relations in Paris on Tuesday.

Soros cites rising sentiment against the European Union – as the populism that currently runs in Italy – the US, resulting from the nuclear Iran withdrawing nuclear deal and rising dollar as ingredients for crisis

Economist Mohamed El-Erian said on CNBC Tuesday morning that the worldwide synchronized economic boom may not be what people think.

"People are now realizing the only economy with The American economy was clearly on the edge, "said El-Erian in the show.

Italy, which suffers as Spain and Greece under high debt, recorded a dramatic increase in its debts, as investors in the safety of the dollar escaped and US Treasury bonds.The gap between Italian and German 10-year bond yields closed the largest spread in four years – another sign of political risks for the Eurozone.

"This move to the bond markets has now spread to equities as investors are reminded of some of the geopolitical concerns that remain in Europe," said Wicker.

"Although a major exit from the Eurozone, as Italy exits, would be detrimental to the stability of the markets as long as the Eurozone persists – which I do not understand English: emagazine.credit-suisse.com/app/art … = 157 & lang = en Markets should eventually normalize, said Chris Zaccarelli, Independent Advisor Alliance Chief Investment Officer, in an email.

Zaccarelli said that although the Italian confusion may be temporary, crises and contagion often start a small path and then move in an unpredictable way. A certain caution is required.


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