By Carla Mozee, MarketWatch
Italian stock and bond prices finished lower Tuesday, weighing on the broader European equity bourses, as the country’s new prime minister outlined the coalition government’s vision for the eurozone’s third-largest economy.
However, European tech stocks overall were pushed to a multiyear high, bolstered by gains for their Wall Street counterparts.
How markets performed
The Stoxx Europe 600 Index /zigman2/quotes/210599654/delayed XX:SXXP +0.98% ended down by 0.3% at 386.89, as financial shares lost the most while tech shares climbed. On Monday, the benchmark rose 0.3% and marked its best finish in a week.
Pressure came from a slump in Italian stocks. The FTSE MIB index /zigman2/quotes/210598024/delayed IT:I945 +1.59% stumbled 1.2% to end at 21,750.15. Italian bond prices also fell, pushing the country’s 2-year bond yield /zigman2/quotes/211347219/realtime BX:TMBMKIT-02Y -5.95% up by 28 basis points to 0.99%, according to Tradeweb. Yields rise when bond prices fall.
U.K. blue-chips declined as well, leaving the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.93% down by 0.7% to 7,686.80. That index fell victim to a rise in the /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0081% , which climbed following a better-than-expected report on British services-sector activity in May.
Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX +1.12% rose 0.1% to 12,787.13, paring an intraday rise of roughly 1%. France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 +1.27% fell 0.2% to close at 5,494.88. Spain’s IBEX 35 /zigman2/quotes/210597995/delayed XX:IBEX +1.31% fell 0.7% at 9,686.40.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.0093% rose to $1.1722 Tuesday following reports that the European Central Bank would use its June 14 policy meeting to discuss an exit from its quantitative-easing program. Late Monday, the shared currency bought $1.1699.
See: Why a bet against the dollar makes sense as trade-war fears fester
What drove markets
The Stoxx Europe 600 was dragged into the red as losses in Italian stocks accelerated. Investors started to ditch Italian equities as Giuseppe Conte, Italy’s new prime minister, outlined “radical change” from the country’s new coalition government.
Conte, in his first address to Italy’s senate said the government—held between the antiestablishment 5 Star Movement and the League parties—wants to cut the country’s heavy debt load by fostering economic growth through welfare spending and cutting taxes. Italy’s debt exceeds roughly 130% of the country’s gross domestic product.
“We want to reduce [debt] through the growth of our wealth, not with the austerity that has contributed to its rising,” Conte said, according to Dow Jones Newswires.
A confidence vote on the new government, which was sworn in on Friday, was to be held in the Senate on Tuesday, while another vote was expected Wednesday in the lower house.
Italian stocks and bonds have been volatile in recent sessions as a previous governing agreement between the 5 Star Movement and the League parties crumbled last week, but a new deal revived the union.