5 Top Stocks To Make The Most Of The Roman Impasse

The euro tanked to a six-month low versus the dollar on May 29, while Italian stocks led European equities lower. The Stoxx Europe 600 Index fell 1.4%, while Italy’s FTSE MIB closed 2.7% lower. This selloff, even, spread to Wall Street. The Dow Jones lost nearly 400 points and erased year-to-date gains.

The broader S&P 500 also shed 31.47 points, with nine of the 11 main sectors finishing in the red. Financials led the declines, down 3.4%, tracking declining Treasury yields. The yield on the 10-year Treasury note dropped 16 basis points to 2.772%, the steepest drop since Brexit vote in June 2016. Political turmoil in Italy drove demand for safe havens such as the U.S. and German government paper, pulling down yields.

The tech-heavy Nasdaq declined 37.26 points, or 0.5%, to 7,396.59. Market volatility gauge, in the meanwhile, hit a 2-month high as Italy’s political mess sparked a global equity selloff.

Why is Italy’s Crisis a Buying Opportunity?

Even though Italy’s troubles are casting a pall over the financial markets, it does provide a buying opportunity for astute investors. It’s not the first time that countries facing debt burden and restrictive fiscal and monetary policies are threatening to pull out from the single currency regime. In the prior crises, stock investors did freak out, but more often than not, it recovered quickly. In fact, the stock market in a very short span bounced back to the level prior to the crisis.

The best example will be the stock market’s reaction to the U.K.’s June 2016 referendum to exit the European Union. The Dow Jones nosedived almost 1,000 points in the two trading sessions following the vote. But, it took just eight subsequent trading sessions for the blue-chip index to reach where it was before the Brexit vote.

Also, consider the market’s reaction to the debt crisis in Greece. In the subsequent years, a slew of fiscal and monetary deals were struck between the Greek government and the stronger European allies. This soothed investors and helped the stock market rally in the wake of the looming threat.

View single page >> |

Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.