On Wednesday, the 5th of June 2019, a stack of European stock had extended their gains, while defensive share had attained much of their footings lost earlier over a tempestuous trade outlook across the world, and growing tension between Italy and EU Commission over a budget deficit which would likely to result in a 3-billion-euro in penalty to Italian government had dampened some of investors’ sentiment.
Although, many of the European bourses seemed to be resilient to the latest development of geo-political tensions, a weaker-than-anticipate US job data which should have been added to investors’ worries, was offset by Fed Chair Jerome Powell’s Tuesday’s (June 4th) comment, that eventually had bolstered investors’ optimism globally.
Meanwhile, tensions around the world including Trump’s tariff war on multiple fronts had supported defensive stocks. On Wednesday’s (June 5th) market closure, the regional Pan-European index, STOXX 600 had added 0.4 percent, posting gains for three consecutive sessions in a row, while Germany’s trade-sensitive DAX and London’s FTSE 100 both added 0.1 percent.
Meanwhile, Italian FTSE MIB had shed 0.4 percent, almost entirely dragged downwards by European lenders, as Milan-trade bank index had shed 1.6 percent. Addressing that European lenders alongside German government bonds, contemplated as the strongest government bond in the world, might witness further shortcomings over the days ahead, a Redburn Financial analyst, Russel Quelch said, “I would expect today’s news to be another dent to the investment case for Italian banks, while higher spreads may ultimately be passed onto consumers through higher rates, the impact is immediately felt through capital as we saw in Q3 2018”.