Early reactions from the Italian referendum defeat sent the global stocks to the offensive ground. After the upbeat performance the previous week, the stocks moved a tad lower headed by the European equities as the constitutional decision brought turmoil in the euro-region. However, the strength of dollar lifted the indices back to the upward momentum. Asian stocks were relatively lower amid the emerging clash between China and the US after newly elected Donald released statements over the Chinese government. Intensifying the market fluctuation, European Bond plummeted while the US yields performed better after the opening bell on Monday.
At the time of writing, US indices were moving higher led by Nasdaq futures with a 0.41 percent rise to end at 4,758.75. S&P 500 futures advanced 0.31 percent to 2,198.88 while S&P 500 VIX added 0.36 percent to 14.12. DAX was the winner of the day with a 1.10 percent increase in 10, 646.50, an additional of 136.65. The strength of the US dollar was reflected in the rise of the US dollar Index as it jumped 0.23 percent to 101.01 at the start of the session.
On the other hand, Euro Index dropped 0.17 percent and Dow 30 lost 0.11 percent. The UK Guilt remained weak after declining 0.39 percent, while Euro Bund was flat at 162.580 as of 10:28 UTC. EUR/USD wallowed with 0.12 percent lost and GBP/USD was fluctuating.
Asian equities were broadly lower as S&P/ASX 200 dropped 0.80 percent and Nikkei 225 declined 0.82 percent. Shares in Taiwan closed lower as the Taiwan Weighted Index dipped 0.31 percent with major losses in the electricity sectors.
Meanwhile, the third largest economy of the European area is facing a great volatility after the constitutional amendment was not approved on Sunday, December 4. The third constitutional amendment failed to materialize as a clear victory of the “N0” vote brushed off the stance of the Democratic Party headed by Prime Minister Matteo Renzi
Supposedly, the referendum aimed to implement an extensive constitutional reform to improve the stability of the Italian government and to lower the cost of public institutions. However, the critics noted that the bill lacks credibility and that the government may attain power more than it should have. Further, the respective legislative procedures might bring uncertainties and conflicts. Prime Minister Renzi approved the reform without acquiring a majority vote from the political parties in the Parliament, sources said.
In relation to this, Prime Minister Menzi took the responsibility as he announced his retirement after the defeat in the crucial vote on Sunday. The statement of Mr. Menzi divided the trust in the Italian economy and affected the market stability of the Euro currency and stocks. Economy Minister Pier Carlo Padoan explained prior to the conclusion of the vote that there was "no risk of a financial earthquake" if 'No' wins, though there may be "48 hours of turbulence.”
The looming uncertainties were no good news for the European Central Bank (ECB) for it increased the possibility of keeping the rates on hold on its next meeting this Thursday. Political and economic stability in the entire European region matter to the ECB to push an adjustment on is monetary policy. In this case, the ECB may consider the effects of the Italy vote on Italy’s banks and the membership of the country in the European Union.
Elsewhere, President-elect Donald Trump was likely created a fuss between the United States and China on his recent tweets. Mr. Trump posted “Did China asks us if it was OK to devalue their currency (making it hard for our companies to compete), heavily tax our products going into.. Their country (the U.S. doesn't tax them) or to build a massive military complex in the middle of the South China Sea? I don't think so!” This statement caught the attention of the investors, which resulted in a weaker performance of the Asian stocks.
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