Markets  |  February 26, 2013 13:43:44

Euphoria alternates panic Euphoria alternates panic

Financial markets during the first half of the European trading enjoyed that Bersani could win the Italian elections, along with Monti to put together a government. First exit poll published at 15.00 following reports confirm and Italian FTSE / MIB is traded at a profit almost 4%. Already hour but it came disappointment. It appeared that Berlusconi probably obtained the largest portion of the vote in the Senate and therefore Bersani not have control both chambers of Parliament, which means that it will be unable to effectively govern. The approval of a majority of laws is necessary because the bottom as well as the consent of the upper house of parliament (House and Senate). Financial markets reacted to these reports very negatively.SP500 index decline of 1.83%, Italian index erased its gains versus the dollar euro raided the lowest level since December, and Italian benchmark FTSE / MIB hold up 4.58% today. Financial markets need stability in politics, and current situation has far from stability. Bargain we have seen thus also to markets such as EURCHF USDJPY or that were hitherto relatively resistant to changes of market sentimenu.

Italy is other

Italian elections have borne one very interesting message. While in Greece, Portugal and Spain, despite the indignation of their policies to the people chose sides that want to improve the fiscal position in Italy, the situation is different. Up to 55% of the vote fell to parties which are against Belt tightening.Berlusconi and Beppe Grill wishing to be an alternative towards technokratickej Monti government (real but just Grillo) so people begin to perceive the positive and not see them in the path of no major problems, but rather as a way to get out of their difficulties.

Grand coalition does not have great chances

The result of the current situation, which may be a detonator and for new problems in Spain, may be new elections. But those would probably come up to the presidential elections, which will be the 15th April. Volatility will meanwhile certainly high. Second possibility is cooperation Bersani left-leaning parties with coalition parties led by Berlusconi. Tonight you'll learn whether such cooperation is possible. If so, it will be a positive one for markets Short-term administration, no attention to the fact that in Italy a large coalition will not last long, and never the election is just a few months aside.But meantime, to learn more about Grillo sympathy voters, and it is possible that the cards will be shed on.

Media: Elections are a disaster

The results of the Italian elections, disregard the bad flax markets (now Italy forward six-month treasury bills to yield 1.237% vs. Yield 0.731% at auction in January), but also abroad. Responding to the election of the German newspaper Der Spiegel was as follows: Leader of the centrist-left-leaning parties Luigi Bersani was not able to gain control in the Senate, which means that a stable government in Italy is very likely. The results can be devastating for Europe. Australian media reacted far expresívnejšie, right on the page headline Australian Financial Review: Is Sentenced to Italy a period of instability? From the other side again commented on the development of the German Finance Minister Roesler: There is no alternative towards reform and consolidation.So the Italian election ended up with the worst possible result and it gives new markets made clear.

Automatic cuts since Friday

In addition to the uncertainty on the Italian market will Uncertainties coming from Washington. Already in the first Fridays Marc automatic cuts to take effect to be fully reflected by June. While Democrats nor Republicans have no concrete plans to deal with situations and, therefore, markets remain in a situation in which it is better to sell first and then ask questions.

View on today

Financial markets are now attempting to reflection, no raster form trends are rapid braking. Risk is the continuation of the bargain in the euro as well as the equity markets. If the euro fails to establish a base level of around 1.30, risk is to fall to the level 1.2870.The stock market must again gain control over the level of 1515/1520 points, the risk is the continuation of the decline toward the level of 1475 points.

Author: John Benaki | TRIM Broker, as | Trading on exchanges TRIM Broker

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