Piazza Affari opens the post-vote session with an increase of 0.60% at the start and reaches + 1.30% shortly after 9.30. On the other hand, the BTP suffers. The first results from the polls define Fratelli d’Italia as the first party with 26.46%, while the Lega and Forza Italia stand on percentages of 8.98% and 7.99% respectively. The total of the coalition therefore reaches 44.35% and would guarantee a majority in Parliament. Giorgia Meloni will probably be the next Prime Minister.
According to the latest ballots, the center-left is at 26.53%, with the Democratic Party below 20% (19.39%).
In these hours the operators evaluate the outcome of the Italian vote. “One of the founding members of the EU is drifting to the right. In a month at the latest, Italy will no longer be ruled by former national banker Mario Draghi, who has led the country steadily through the pandemic, inflation and war in Ukraine, but by a woman sinking her its roots in post-fascism, which calls for a “Europe of patriots” and which has repeatedly opposed minorities in the electoral campaign. She who, in case of doubt, she prefers to coordinate with Viktor Orban’s Hungary rather than with Germany »writes the Handelsblatt this morning.
Meanwhile, the euro continues to lose ground against the dollar. This morning it moves in the 0.9682 area and depreciates by 0.4% at the start.
The Italian debt is yielding ground. Among the special observers after the results of the vote, in the early stages of the session, the yield of the Italian ten-year BTP rose to 4.495% from 4.362% at the previous close. The yield differential between Italy and Germany on the ten-year stretch is 236 basis points from 228.9 at the previous end.
The first reactions of the analysts were not long in coming: «The center-right coalition is ahead as expected. According to the nightly projections, the center-right coalition won the general elections but did not reach the qualified majority, necessary to reform the Constitution. The center-right coalition’s share is actually a simple majority, but due to the electoral system, it will receive enough seats to control both chambers. The new parliament will meet for the first time on 13 October; the formation of the government could take several weeks, but it should be possible to draw up the budget by the end of the year – writes Matteo Ramenghi, Chief Investment Officer UbsWm Italy -. The Bank of Italy reported a disciplined fiscal policy during the election campaign. Within the coalition, Fratelli d’Italia (FdI) has become the driving force. This could have an impact on economic policies because, unlike the Lega, the Bank of Italy repeatedly stated during the election campaign that it was against an expansionary fiscal policy. The main areas of control in the coming months will be fiscal discipline, the ability to make full use of the Recovery Fund and avoid protectionism ». The expert highlights the risks: «The risk premiums for Italian government bonds have more than doubled compared to the pandemic lows and are around 230 bps compared to 10-year German Bunds. We believe that investors in Italian short and medium-term bonds are well compensated for the risks deriving from the high burden of Italian public debt and the recurring episodes of political uncertainty. Although it is unlikely that the ECB will intervene directly in reaction to a moderate increase in spreads, we believe that it will ultimately act to contain substantial distortions as long as Italy remains in agreement with the EU on fiscal policies ».