Business World

Sunday 17 December 2017

European stock markets jittery before Italy's constitutional vote

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)

European stock markets ended yesterday's session in the red, pushing them to a weekly loss.

Investors are still concerned that a constitutional referendum in Italy on Sunday could be rejected, sparking the possibility of contagion to financial stocks especially.

Italy's FTSE-MIB closed flat yesterday ahead of the vote, but the Stoxx Europe 600 declined 0.4pc. It closed at the lowest level in more than two weeks, having fallen 0.9pc this week.

"There are dire warnings that eight Italian banks could fail should Italy vote 'No', which makes us think it's not entirely clear if markets are really reflecting the risk of this event properly," said Neil Wilson, senior analyst at ETX Capital.

"Even if we get a 'Yes' vote, it's hard to see the problems dissolving into thin air."

European equities have been under-performing Wall Street, which has surged to record highs on expectations of a massive fiscal stimulus after president-elect Donald Trump enters the White House.

In Ireland, the ISEQ Overall Index was flat at 6,184.10.

Declines in CRH, Smurfit Kappa and Ryanair were offset by gains in financials after AIB issued a strong trading statement.

Shares in State-owned AIB rose 13pc to €5.65. Bank of Ireland also rose, adding 1.4pc to just under 22 cent. Permanent TSB fell 2.5pc to €2.53, however.

The UK's FTSE-100 fell 0.3pc. Germany's DAX retreated 0.2pc and France's CAC-40 was 0.7pc lower.

Italy's FTSE-MIB index was flat ahead of its constitutional referendum on Sunday.

European banks fell 1.3pc, the biggest decliner in the sector, dragged down by a 2pc to 4.6pc decline in Banco Popular, Royal Bank of Scotland , BNP Paribas and Credit Suisse.


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