While global markets remain largely a sea of green, ignoring the threat of a trade war between the US and the rest of the world which remains a non-event for now (for reasons discussed overnight), the move higher has been more muted overnight, and even as European and Asian stocks extended Monday's gains and U.S. futures pointed to a higher open, some familiar risks have re-emerged.
Europe's Stoxx 600 Index advanced for a third day, if off its highs, led by tech companies and automakers. Looking at sectors, Telecoms are underperforming while IT names outperform. In terms of stock specifics, RBS (-3.6%) is hit after the UK government decided to sell a 7.7% stake in the company worth around GBP 2.6bln following the bank bailout during the crisis.
Following some early outperformance, Italy's FTSE MIB slumped into the red as Italian PM Conte delivered his inaugural speech before Senate (ahead of a confidence vote later today which is expected to pass) in which the new prime minister re-asserted that the Five Star-League government will follow a radical policy program, noting that citizens have a right to universal income and minimum wage, proposals which are set to blow out Italy's budget and public debt. It is therefore not surprising that Italian bond yields spiked to session highs as Conte spoke.
Here are the highlights so far from Conte's inaugural speech:...
- This is a project for the change of Italy.
- I take up this responsibility with humility and determination ... I am motivated by nothing but a spirit of service ... like a lawyer representing all of Italy’s people.
- This is not a simple novelty. The truth is that we have brought a radical change, of which we are proud.
- We will put an end to the immigration “business” which has grown out of control under the guise of solidarity.
- We want to reduce public debt by increasing the wealth of our economy, not through austerity.
- We intend to preliminarily restate our convinced membership of our country of NATO, with the United States of America as a privilege partner.
- The elimination of the gap in growth between Italy and the European Union is our objective, which must be followed in a framework of financial stability and the trust of markets.
- This government intends to act with determination (against political privileges). The struggle against the privileges and waste is not a merely symbolic question.
- Italian public debt is fully sustainable today. However, its reduction must be pursued, but with a view to economic growth. Fiscal and public spending policy should be geared towards the pursuit of the objectives set for stable and sustainable growth. In Europe, these issues will be strongly pushed forward with the aim of change of its governance, a change already at the centre of reflection and discussion in all