Sharechat Logo

While you were sleeping: Berlusconi on the edge

Wednesday 9th November 2011

Text too small?

Wall Street investors are unsure where the situation in Europe is headed with Italy moving forward to rein in its finances and Silvio Berlusconi moving closer to looking for a new job.

Italian Prime Minister Silvio Berlusconi won a budget vote but lost the majority.

In afternoon trading in New York, the Dow Jones Industrial Average slipped 0.16 percent. The Standard & Poor's 500 Index edged 0.04 percent higher and the Nasdaq Composite Index rose 0.10 percent.

“The fact that Berlusconi doesn’t have majority is a reflection of uncertainty,” Hank Smith, chief investment officer at Haverford Trust in Radnor, Pennsylvania, told Bloomberg News. “We had a good step forward in Europe. Still, it really comes down to added uncertainty. The market wants to see the risk of contagion being taken off the table.”

In Europe, the Stoxx 600 Index gained 0.9 percent by the close of trading.

Pier Luigi Bersani, leader of the main opposition Democratic Party, pleaded for Berlusconi to resign to avoid losing access to financial markets as the yield on Italy’s 10-year bonds climbed to a record 6.74 percent. Italy has the second-highest debt load in Europe at 120 percent of gross domestic product.

"I ask you, Mr Prime Minister, with all my strength, to finally take account of the situation ... and resign," Bersani said immediately after the vote, Reuters reported.

Over in Greece, Prime Minister George Papandreou said a national unity government will be formed “soon” and asked his ministers to prepare to resign.

Former central banker Lucas Papademos is touted as the new leader by local media reports, though his appointment has been delayed as he’s negotiating terms.

The euro was last at US$1.3786, barely edging higher on the day. The greenback weakened 0.22 percent against a basket of six major currencies.

Data released today indicated a resilience in Europe’s largest economy amid the euro zone’s fiscal crisis, showing that Germany’s exports unexpectedly rose for a second month in September.

Also exceeding expectations was Lloyds, pushing its stock more than 4 percent higher, after the British bank made smaller-than-estimated provisions for bad loans in the third quarter. The company said it might miss its income target for 2014, which didn’t come as a surprise.

“The fact that there were no monsters in there is reassuring,” Bruce Packard, a banking analyst at Seymour Pierce in London, told Bloomberg. “I didn’t think their 2014 targets were ever achievable.”

For those who work on Wall Street, a reality check is coming. The average bonus will decline by 20 percent to 30 percent this year, according to a closely watched compensation report, as banks cut costs and lay off workers.

Employees in the bond-trading business will face the sharpest pay cuts, with bonuses down 35 percent to 45 percent from a year earlier, according to a projection by New York compensation consulting firm Johnson Associates, Reuters reported.

For those on Main Street, a US Labor Department report bolstered hopes that the job market was finally picking up. Job openings rose by 225,000 to 3.35 million, the most since August 2008.

(BusinessDesk)

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

TruScreen Group Limited (NZX: TRU) Clinical Trial Results Highlight Efficacy of TRU Technology
20th October 2021 Morning Report
Freightways Limited (NZX: FRE) Acquisition of ProducePronto
19th October 2021 Morning Report
PGG Wrightson Limited (NZX: PGW) Guidance Update
Vital Limited (NZX: VTL) Provides Update on PSN LMR
18th October 2021 Morning Report
T&G Global Limited (NZX: TGG) FY21 Earnings Guidance Update
Arvida Group Limited (NZX: ARV) Successful Completion of $155m Placement
FreshLeaf: Cannabis on course to be 'medicine of the masses'