This post was originally published on this site
A nun wearing a face mask leaves after casting her vote at a polling station in downtown Rome on September 20, 2020.
Italian stocks rose and the yield on government bonds fell after regional elections and an overwhelming mandate to reduce the number of lawmakers in a referendum.
The FTSE MIB I945, +0.91% stock market index rose over 1%, and the yield on 10-year Italian bonds TMBMKIT-10Y, 0.880% fell to 0.89% from 0.94%. Yields move in the opposite direction to prices.
There was a 3-3 split in regional elections between the center-left and the center-right that further cemented the governing coalition, and was seen as reducing the chance of a snap election. Some 70% of Italians voted to reduce the number of MPs by a third.
“The referendum and election outcomes represent supporting factors for the governing parties, mainly the Five Star Movement and the Democratic Party, and are likely to support government action and help mitigate political tension within the ruling coalition,” said analysts at Italian bank Unicredit.
Domenico Ghilotti, an analyst at Italian brokerage Equita, said the election results should allow the government to refocus on the implementation of the European Union recovery fund.
To get funds from the EU recovery fund, countries must lay out a package of reforms and investment projects. The Italian government already has submitted a proposal to parliament, and assuming it gets passed, will then head to the European Commission by mid-October.