European Equity Market Handover Rome rumbles reverse rebound attempt

Stock market snapshot as of [28/5/2019 2:13 PM]

• A dearth of new developments on the U.S.-China trade front increases focus on a confluence of events in Rome
• Chiefly, these are widening coalition fractures, a strengthened Northern League following EU elections and a European Commission triggered by Italy’s failure to follow debt and budgetary prescriptions. A multibillion euro fine may follow

• Italy’s volatile yields are back on the rise. The closely watched 10-year rate has added more than 184 basis points since the end of last week to stand around 2.70%. It peaked at 2.8% a fortnight ago

• Markets are thereby set to go back in thrall to Italian yields after their elevation a year ago coincided with some of the most eye-catching European stock index whipsaws for years
• Germany’s benchmark yield spread to Italy’s duly widens. The U.S. Treasury rally gets fresh legs, sending the 10-year rate to a 19-month low
• Still, a surprise swing higher in an EU economic confidence gauge, earlier—with weak trimmings—helps keep a floor under shaky indices
• Like some European cash markets, S&P 500 mini futures were flirting with positive territory near Wall Street’s open

Corporate News

• Shares in Italy’s fragile banks have slumped, including a 3% drop by FinecoBank and weakness across other large lenders like Mediobanca, UniCredit and Intesa Sanpaolo
• Persistent contagion fears return, weighing heavyweights further afield like Société Générale which was down about 2% a while ago
• Fiat, whose merger news offered positive global market distraction on Monday adds a little more to double-digit percentage gains a day earlier. This helps the car & parts sector to a second positive session too
• Deepwater contractor Seadrill could be among the sharpest S&P 500 fallers at open, as it tumbles 15% in pre-market deals following a brokerage downgrade

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