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Italian election leaves inconclusive result causing sharp market falls
European markets have opened to falls following an inconclusive result in the Italian elections, with the Frankfurt and Paris exchanges falling by over 2%.
Closing whilst election results were being announced New York’s Dow Jones Industrial Average fell by 1.55%.
By late morning trading Europe’s major indexes were yet to fully recover as Italy looked ahead to days of political uncertainty, with the UK’s FTSE100 had fallen 1.36%, Germany’s Dax by 1.84%, France’s Cac 40 by 2.25% and Italy’s FTSE MIB by 4.7%.
Italian bond yields also saw a sharp rise with bond traders showing concern over who would form the next administration after no party gained the necessary control of both houses of the parliament to form a government.
Yesterday’s general election has led to political deadlock with Pier Luigi Bersani’s centre-left Democratic Party-led group set to control the Chamber of Deputies with 340 seats whilst former Prime Minister Silvio Berlusconi’s centre-right People of Freedom Party-led group securing 124, but will remain the largest party in the Senate with 116 to the Democratic Party’s 113.
Beppe Grillo’s Five Star Movement, which argues against economic austerity, came third and gained 108 seats in the Chamber of Deputies and 54 seats in the Senate, compared to current Prime Minister Mario Monti’s Civic Choice movement coming fourth with 45 and 18 seats in the respective houses of the Italian Parliament.
European Foreign Ministers have responded to the results with concern, with Spanish Foreign Minister Garcia-Maragallo saying the results were a “jump to nowhere that does not bode well either for Italy or for Europe” whilst Germany’s Guido Westerwelle argued Italy needed to form a new government “”as quickly as possible”.
