An earlier version of this story incorrectly said Draghi had resigned before he had done so.
Italian Premier Mario Draghi waits to deliver his speech at the Senate in Rome, Wednesday, July 20, 2022.
AP
Italian assets fell sharply on Thursday on news that Prime Minister Mario Draghi had tendered his resignation, after members of his governing coalition refused to back him in a no-confidence vote.
Traders dumped Italian government bonds, pushing the yield on 10-year paper
TMBMKIT-10Y,
up 25 basis points to 3.61%. The yield spread with Germany, a closely watched gauge of stress for Rome’s debt, jumped to 239 basis points, as doubts grew that Italy could fulfill conditions necessary to receive its €200 billion ($204 billion) share of the EU’s coronavirus recovery fund.
The FTSE MIB
I945,
equity index shed 2.2% to 20841 as investors also worried that Draghi’s departure would stymie the chances for Italy to deliver economic reforms designed to improve efficiency and long term growth.
“The context of economic and geopolitical uncertainty is thus combined with a phase of political turbulence and a risk of lower credibility at the international level,” said Luigi De Bellis, an analyst at Italian brokerage Equita, in a note to clients.
The fresh turmoil for Italy comes ahead of a European Central Bank meeting and policy decision on Thursday.
