MILAN — European stock markets registered positive performances in mid-morning trading on Wednesday in the wake of Italian prime minister Giuseppe Conte’s resignation on Tuesday.
Milan’s FTSE MIB regained some ground climbing 1.75 percent to 20,844.33 compared to its negative performance — the worst in Europe — that followed the announcement on Tuesday, when the Italian market dipped 1.1 percent to 20.485,43.
Overall, the uncertainty of the Italian political situation was mirrored by negative performances of European markets on Tuesday, with the FTSE 100 in London closing down 0.9 percent to 7,125 and the CAC 40 in Paris and DAX in Frankfurt both down 0.5 percent to 5,344.64 and 11,651.18, respectively.
On Wednesday morning, all stock markets recovered as the FTSE 100 in London climbed 1.05 percent to 7,200.17, the CAC 40 in Paris was up 1.45 percent to 5,422.20 and the DAX in Frankfurt was up 1.14 percent to 11,784.53.
Retail and luxury stocks were on the upswing, including Italian brands such as Moncler, up 2.8 percent to 35.33 euros, and Salvatore Ferragamo, up 1.8 percent to 18.07 euros.
Conversely, Tod’s SpA was down 3 percent to 49.80 euros after its shares spiked on Tuesday, jumping more than 8 percent to 51.35 euros. The spike followed a regulatory filing that pointed to plans by one of chairman Diego Della Valle’s holdings to increase its share of voting rights in the luxury group to 81.19 percent.
The Della Valle family holds 76.7 percent of voting rights with an equity stake of about 64 percent of the Italian shoes and leather goods company, which include the Tod’s, Hogan and Roger Vivier brands.
According to Italian market regulator Consob, on Aug. 9 Della Valle’s holding signed a contract with Crédit Agricole, under which it agreed to buy up to 2.4 million Tod’s shares by Nov. 26 through an accelerated shares purchase.
Meanwhile, Caisse de Depot et Placement du Quebec reduced its stake in Tod’s from 5.2 percent to 2.2 percent.
Conte’s resignation deepens the Italian political crisis but has also been perceived positively as it opens to the prospect of a new administration and marks the end of the coalition between the anti-establishment Five Star Movement and the anti-immigration Lega Nord right-wing party that has been received with skepticism from markets since it rose to power 14 months ago after both populist parties were winners at the general elections.
Yet Italy is left in a chaotic situation, ignited in the middle of the summer break that traditionally immobilizes all daily activities in the country.
On Aug. 7 relations between the coalitions partners deteriorated as the Five Star Movement voted against the trans-Alpine high-speed railway linking Turin with Lyon, France. The project was strongly supported by Lega Nord, and the same day the party’s leader and Italy’s deputy prime minister Matteo Salvini addressed to the different visions of their political ally. A move that was quickly turned into a vote of no confidence in the government and a call for early elections.
In the following weeks, political speeches and personal accusations added to the crisis which loudly resonated on Italian media until the final act was staged on Tuesday afternoon with the announcement of Conte’s resignation during a speech in which he strongly accused Salvini of “pursuing his personal interest and the interests of his party” as he intends to “capitalize on the popular consensus.” Incidentally, Salvini’s popularity outshined the one of fellow Italian deputy prime minister and Five Star Movement leader Luigi di Maio thanks to an aggressive anti-immigration policy and his image of a common, patriotic and catholic citizen built and widely shared through social media and strengthened via appearances on TV talk shows and public events.
This week Italy’s president Sergio Mattarella will consult party leaders to decide the way forward and whether there’s space for a new majority to lead the country or early elections are needed. Conte, who is not a member of neither party, might also reprise his role as prime minister under a new coalition.
The timing is not in Italy’s favor, though, as the country not only is facing economic stagnation and an ongoing influx of immigrants, but has to present the yearly balance bill by Oct. 15 and approve it by the end of the year.