Economy

Dow plummets over worries of political turmoil in Italy

Dow plummets over worries of political turmoil in Italy”

The major US index futures are pointing to a higher opening on Wednesday following the sell-off seen in the previous session.

Banks rose along with bond yields Wednesday after sustaining big losses a day ago.

Shares of large US banks were also pressured by downbeat guidance from JPMorgan Chase & Co (Xetra: 850628 - news) and Morgan Stanley (Xetra: 885836 - news). Fears about instability in Italy and the possibility of the country's exit from the euro sent investors piling into safety assets on Tuesday.

The S&P 500 index advanced 34.15 points, or 1.3 percent, to 2,724.01.

The Dow Jones industrial average climbed 306.33 points, or 1.3 percent, to 24,667.78. The Nasdaq Composite dropped 0.5 percent, to 7,396.59. KeyCorp rose 2.2 per cent.

US stocks are climbing Wednesday morning, recovering some of the ground they lost the day before, as investors hope Italy might be able to avoid a new round of elections.

The political crisis in Rome, and the threat to the euro project it represents, triggered a rush to traditional safe havens like US debt, pulling down USA 10-year Treasury yields and in turn spurring losses for USA banks.

ASIAN SCORECARD: Japan's Nikkei 225 index gained 0.8 percent to 22,201.82 and Hong Kong's Hang Seng index jumped 1.4 percent to 30,468.56.

ENERGY: Energy companies rose as US crude oil climbed 0.7 percent to $67.22 per barrel in NY.

Exxon Mobil fell 1 percent, while Chevron was down 1.3 percent. They suffered only modest losses the day before.

"The direct connection between the Italian government and the S&P 500 is tenuous, but it indirectly reminds people of geopolitical uncertainty", Reuters quoted Ed Keon, chief investment strategist at QMA in Newark, as saying.

The Nasdaq is up 28.60 points, or 0.4 percent.

The yield on the 10-year Treasury rose to 2.86 percent.

USA stocks sank Tuesday amid political turmoil in Italy that sent the euro tumbling and ongoing hard trade talks with China.

Overall losses, if any, remained limited as Italian equities rebounded on reports that the major parties in Italy are calling for President Sergio Mattarella to dissolve parliament immediately and conduct fresh elections as early as July. Brent crude, used to price worldwide oils, added 2.8 percent to $77.50 a barrel in London. JPMorgan Chase added 1.5 per cent. USA banks were benefiting from a turn higher in bond yields, which allows them to charge higher interest rates on loans.

The Standard & Poor's 500 index climbed 25 points, or 1%, to 2,715 as of 11 a.m. EDT.

The German DAX was moving up 0.4 percent and the U.K.'s FTSE 100 was marginally higher while France's CAC 40 was down 0.6 percent after the release of disappointing data.

The Nasdaq rose by 65 points as a result of tech gains.

"And you see the yield curve flattening, the two 2-10 spread to closest to the flattest to the year, and that's bad for the profitability of the banks".



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