European Stocks Soar, US Futures, Euro Jump After Failed Italian Referendum

Blink, and you missed the “sell off” from Italy’s failed referendum vote.
In the initial hours after yesterday’s vote which has cost Italy’s PM his job and ushered in a period of political limbo and potential chaos, markets were jolted by the scale of Renzi’s defeat which, as Reuters put it, “pointed to further turbulence and political crisis in the euro zone’s heavily indebted third-largest economy and particular uncertainty was focused on the country’s fragile banks.” The euro fell to a 20 month low, as low as $1.0508 and the Milan bourse shed as much as 2% while Italian bond yields spiked sharply higher.
As confirmed by the following headlines, there was a palpable sense of panic about how markets would react: Renzi Quits as Italy Referendum Defeat Deepens Europe’s Turmoil Shares of Monte Paschi, UniCredit don’t immediately set opening price, limit down Pop. Milano drops as much as 6%, Banco Popolare as much as 5.9% While ‘No’ outcome shouldn’t be major surprise, ‘margin of rejection and news of Renzi’s resignation will spook the markets’ Spread on Italian government debt seen widening further when markets open, stock market down Italy ‘No’ a Lost Opportunity; Won’t Impact Utilities: Bernstein Markets to Correct on Italy Vote, EU Survival in Spotlight: Citi And then, just before the European open, everything changed on a dime, or rather in “three minutes” as Guillermo Hernandez Sampere, head of trading at MPPM EK put it: ‘After Brexit, it took three days for markets to shake it off, with Trump it took three hours, with Italy it took three minutes. The fast money, who expected markets to fall further with this outcome, are now covering their positions.’

This post was published at Zero Hedge on Dec 5, 2016.

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