European markets shrug off impact of Italian vote
INM rises 1.7% after restructuring that should pave way for return of dividends approved
Crushing margin of prime minister Matteo Renzi’s defeat stirred alarm among investors in Italian stock markets. Photograph: Alessandro di Meo/EPA
European markets pushed ahead on Monday, brushing aside concerns that the euro zone may be hit by a fresh bout of economic uncertainty triggered by the “No” vote in the Italian referendum.
While Italy’s “No” vote was anticipated, the crushing margin of prime minister Matteo Renzi’s defeat – 59 per cent to 41 per cent – stirred alarm among investors in Italian stock markets. Milan’s main bourse was down 0.4 per cent late in the day after earlier falling as much as 2 per cent.
Italian financials shed 2.6 per cent as a €5 billion rescue plan for the Monte dei Paschi di Siena bank hung by a thread.
The euro hit a 20-month low of $1.0503 before rising 0.4 per cent to levels not seen since November 17th.
The Iseq closed up 57 points at 6,232, roughly in line with other European bourses. Independent News & Media rose 1.7 per cent to 11.8 cents after shareholders in the media group approved a capital restructuring that should pave the way for a resumption of dividends at an extraordinary general meeting, which was overshadowed by its decision to wind up its defined-benefit pension scheme.
Ryanair was another strong performer, rising 2.75 per cent to €14.19, after it released another strong set of monthly passenger numbers. The airline said it carried 8.8 million passengers in November, an increase of 15 per cent on the same time last year.
Bank of Ireland defied some of the European pressure on financials in the wake of the Italian vote, climbing 2.75 per cent to 22.4 cents.
Food group Glanbia, meanwhile, ended the day 2 per cent down at €15.36. After being up significantly, building group CRH fell back somewhat but still managed a positive session, closing up 0.05 per cent at €30.82.
Hibernia Reit had another good session, trading up 1.7 per cent at €1.18.
The FTSE 100 Index closed 16.11 points higher at 6,746.83, with a strong performance from mining stocks pulling the index back into the black after losses over two straight sessions.
In UK stocks, a surge in copper prices boosted the mining giants, with Antofagasta finishing at the top of the biggest risers, up 4 per cent or 34p to 727.5p.
Shares in Royal Bank of Scotland rose 4.4p to 197.8p after the bank announced it had reached a “final settlement” with three out of the five shareholder groups bringing compensation claims against it in connection with its 2008 rights issue.
The other biggest risers on the FTSE 100 Index were Glencore up 12.4p to 290.3p, Carnival up 132p to 4,039p, Anglo American up 34p to 1,243p.
The biggest fallers on the FTSE 100 were Fresnillo down 48p to 1,150p, Randgold Resources down 185p to 5,640p, United Utilities down 24p to 858.5p, and Severn Trent down 53p to 2,074p.
Italian lenders Banca Popolare di Milano Scarl and UniCredit both slid at least 5.6 per cent, as the outcome of the referendum raised questions about the nation’s plans to plug holes in its banking sector.
Prime minister Matteo Renzi’s reforms were aimed at simplifying the legislative process in a nation that has seen 63 governments since the end of the second World War.
Outside of Italy, European markets took some encouragement from the sound defeat in Austria’s presidential election of a far-right candidate by a pro-European, despite forecasts of a tight race.
Europe’s FTSEuroFirst index of leading 300 shares rose 0.7 per cent and Germany’s Dax rose 1.6 per cent.
Wall Street rose on Monday, with financials and technology stocks powering Dow to a new intraday high and boosting the S&P and the Nasdaq.
The Dow has been enjoying a record-setting rally, largely driven by bank and industrial stocks, which are expected to benefit the most from higher spending on infrastructure and simpler regulations under a Donald Trump administration.
The index has risen 5 per cent since the November 8th vote, while the S&P financial index has surged 14.3 per cent.
Goldman Sachs rose 2.2 per cent to $228.32, its highest in nine years, after HSBC initiated coverage with a “buy” rating and a $250 price target.
Eight of the 11 S&P sectors were higher, with financials’ 1.3 per cent rise leading the gainers, followed by a 1.05 per cent gain in technology .
Health insurers Aetna and Humana were down more than 3 per cent, dragging down the healthcare index, after justice department attorneys argued to a judge that Aetna’s acquisition of Humana violated antitrust law for its Medicare and Obamacare exchange businesses. – (Additional reporting by Reuters)