After Italy’s failed constitutional referendum result last week there has been increased possibilities of an Italian exit from the European Union. Investors fear that a failed vote could send raptures in global market, triggering a big sell-off. Italian Prime minister Matteo Renzi has resigned from office just moments after the election results were revealed, having spent over 2 years leading the country.
The markets moved higher as potential talks of another EU bailout was on the table, it has already had two state bailouts, in 2014 and 2015. Italy has the third largest economy in the European Union will be monitoring the situation more closely.
However new developments have made markets more optimistic about the future and the Italian banks lead the rally. Recent reports show that many Italian banks are facing major uncertainty with increasing bad debt and desperate need for new refinancing. The ECB has extended its asset-buying program to try stabilise the Eurozone economy.
Banca Popolare IT is now trading at 0.35 region, having recovered from weekly lows of 0.286. Bank giant Unicredito reversed a downwards trend and is now trading at around 2.42 per share.
Paolo Gentiloni has been chosen as the new Italian prime minister, but will he and whatever government emerges be able to handle their economical and banking crisis?