Markets calm ahead of Italian elections

Only ten days left until the 4th of March 2018 when Italian citizens will go to the polls to choose their next government. The financial problems that the Mediterranean country is facing are at the top of the agenda of every political party’s election campaign. The unemployment rate came in at 10.8% in December 2017, which is a 5-year low for the Italian labour market. It should be noted that at the peak of the financial crisis in November 2014, the unemployment rate had climbed to an all-time high 13% figure. However, the Italian unemployment rate is still one of the highest in Eurozone.

Trade Italian elections with STO

Political analysts have said that the economy will play a vital role in how Italians will vote in the upcoming elections. According to the Italian National Institute of Statistics (ISTAT) report published on 14th February 2018, the Italian Gross Domestic Product (GDP) grew by 1.4% during 2017, which is the highest pace of growth recorded since 2011. However, the Italian GDP is still 5.7% lower than its pre-crisis level, ISTAT analysts noted. Immigration from Asian and African countries and the management of the banking crisis are issues that are also troubling Italian voters.

Markets complacent over Italian elections

Polls have shown that the outcome of the election on the 4th March 2018 will be a hung parliament with none of the political parties seem to be able to forge a majority. The new electoral law that was introduced in 2017 has made it difficult for analysts to predict the margin needed for a party to take power.
A report by Goldman Sachs, published on 23rd January 2018, said that the most likely outcome will be the forming of a coalition government of left, right and centre parties. Rabobank analysts wrote in their report, released on 20th February 2018, that “the balance of risks are skewed to the downside. Markets like the low-key management of the current prime minister Paolo Gentiloni. A status quo, in which a grand coalition is formed under his command, would be the most stable and predictable situation.” In the Rabobank report, it is noted that every other outcome, including the formation of a centre-right government, would be considered worse.

Pier Carlo Padoan, who is the current Economy minister, told reporters in Brussels, on 20th February 2018, that “the markets are less worried, evidently because they rate the risk of instability as much lower than it might seem at a superficial reading”, adding that the Economic and Financial Affairs Council’s (ECOFIN) concerns have not risen. Pier Carlo Padoan’s comments seem to be accurate as the FTSE-MIB (Milano Indice Di Borsa), Milan’s premier listing, has gained 4.3% since the beginning of 2018, while other European stock markets, such as Germany’s DAX-30 (Deutscher Aktienindex) and the French CAC 40 (Cotation Assistee en Continu) have lost ground. The FTSE-MIB was the best performing benchmark index in Europe in January 2018. The FTSE-MIB accounts for approximately 80% of the overall market capitalisation on the Borsa Italiana.

Trade with STO on the most active European shares

The new electoral law and the number of political parties participating in the Italian elections on 4th March 2018 have increased the chances for the formation of a coalition government. Markets have remained calm so far as investors’ concerns that an anti-European Union (EU) government would jeopardise Italy’s future in the Union and in the shared currency have been allayed.

STO enables its clients to trade on the most active shares on the Italian and German stock markets. Over 100 CFDs are at the trader’s disposal to choose from and form his trading strategy. STO also offers advanced trading tools such as Expert Advisors (EAs) and Chart Indicators in order to assist its clients make the best possible decisions regarding trading.

STO Review