Italian prime minister Silvio Berlusconi failed to win a majority in a budget vote Tuesday and agreed to step down once the country adopted economic reforms.
The move makes Berlusconi the highest profile political victim of the two-year old European debt crisis. The colorful prime minister, known for his wild parties and legal troubles, begins his exit as yields on Italian bonds reached yet another high of 6.76 percent.
Ireland and Portugal were laid low by similarly high interest rates and ultimately took financial bailouts. But Italy — the world’s 11th largest economy — is seen as too big of a bailout for the Eurozone to manage.
“While Italy is solvent, sustained interest rates at above 7 percent over several quarters and next-to-zero GDP growth could start to turn the debt dynamics negative and ultimately into an insolvent position,” said Jan Randolph, head of sovereign risk at forecasting firm IHS Global Insight in an analysis.
Randolph said interest rates could fall with Berlusconi out of office.
More certainty surrounding Italy, which has recently taken center stage in the debt crisis, could help stabilize the situation as European Union leaders put in place a broader plan to right the region’s finances.
The European markets made modest gains for the trading day, which ended before Berlusconi pledged to step down. Paris’ CAC 40 led the pack with a 1.3 percent rise, followed by London’s FTSE 100 in London, which climbed 1 percent. Milan’s FTSE MIB advanced 0.7 percent and Frankfurt’s DAX was up 0.6 percent.
Among the stocks losing ground were Arcandor, which tumbled 6.2 percent; Safilo Group, which sank 7.7 percent, and Aeffe, which fell 5.2 percent. The day’s biggest gainers included Hugo Boss, which rose 4.9 percent after the company significantly raised medium-term profit and sales guidance. Compagnie Financière Richemont was up 3.3 percent while Luxottica Group rose 2.2 percent. PPR, which announced its purchase of Brioni on Tuesday, saw its shares rise 2.4 percent.
In the U.S., the S&P Retail Index rose 1.2 percent, or 6.47 points, to 549.64, as the Dow Jones Industrial Average picked up 0.8 percent, or 101.79 points, to 12,170.18. Among the advancers were Wal-Mart Stores Inc., up 2.4 percent to $59.32; Nordstrom Inc., 1.1 percent to $51.20, and Ralph Lauren Corp., 1.1 percent to $159.05.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast