Published: Wed, May 30, 2018
World Media | By Cesar Oliver

Wall Street falls on Italy worries; bank shares drop

Wall Street falls on Italy worries; bank shares drop

"The direct connection between the Italian government and the S&P 500 is tenuous, but it indirectly reminds people of geopolitical uncertainty", said Ed Keon, chief investment officer of QMA in Newark, New Jersey.

The populist parties' effort to form a government foundered on their choice of an anti-euro figure as economic minister, rejected by Mattarella.

Stocks in the USA and Europe sank following political turmoil in Italy, which stoked fears of instability in the euro bloc.

Investers are concerned that the anti-austerity, eurosceptic 5 Star and League could increase their majority at the next election.

Investors fear that repeat elections - which now seem likely in the euro zone's third-largest economy as soon as July - may become a de-facto referendum on Italian membership of the currency bloc and the country's role in the European Union.

Japan's Nikkei futures traded in Chicago pointed to a 1.4 percent fall in the Nikkei.

The Standard & Poor's 500-stock index dropped by 1.16% to 2,689.86, while the NASDAQ plunged 0.5% to close at 7,396.59. The yield on Italy's main 10-year bond rose to its highest level in more than four years, spiking as high as 3.42 percent at one point in morning trading in Europe. The dollar fell to 108.53 yen from 109.77 yen.

US 10-year Treasuries were yielding 2.817 percent in the Asian afternoon, edging up from the USA close of 2.768 percent, while S&P futures ESC1 rose 0.2 percent.

ANALYST'S VIEWPOINT: "Worries over geopolitics look set to hit Asia after sweeping through Europe and also the U.S.at the start of the week".

The United States said on Tuesday that it would continue pursuing actions on trade with China, prompting Chinese state media to slam the USA announcement.

New worries about the euro sent the currency to its lowest level against the dollar in almost a year. By mid-afternoon Asia time it was at 2.81 per cent.

Technology companies also fell. It dropped 1.7 per cent to $66.73 a barrel in NY.

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