Over on mainland Europe Italy’s FTSE Mib was the only index showing any real signs of life. The Italian benchmark soared across the session, boosted by its banking sector. Italian banking stocks were firmly in favour after the Italian government convinced the European Commission that the new measures that it submitted this week will help to bring its growing debt in line with fiscal rules.
A relief rally on the back of Italy avoiding disciplinary action over the state of its public finances has lifted the banking sector 3%, taking FTSE Mib into the 1-year high club.
The 3% rally for the sector comes following a 5% gain in the previous session, as among other factors, investors reacted to Christine Lagarde taking the helm at the ECB. Christine Lagrde is seen as the continuation candidate following Mario Draghi and is expected to adopt an accommodative stance to monetary policy. Her appointment removes the risk of a known hawk stepping in.
Factors are certainly aligning for the FTSE Mib, yet whilst there is all good new for now, Italian troubles will almost certainly resurface in Autumn 2020 when the draft budget must be submitted.
Levels to watch:
The FTSE Mib is trading above ts 50, 100 and 200 sma indicating bullish momentum.
Resistance can be seen at 22270, prior to 22850 and 23465. On the downside the index could find support at 21215 prior to 20350 and 19550.
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