With the euro recovering all of its early losses (and then some), and the DAX and CAC rising by 1.5% and 1.1% respectively, the Renzi-resignation-triggering ‘No’ win seems to have been brushed aside by investors. There are likely a few reasons for this, first and foremost the fact that, unlike June’s Brexit or November’s Trumpocalypse, the polls were actually correct this time around. The ‘No’ vote had the lead in the majority of the surveys leading up to the referendum, so when that result was confirmed it came as no surprise.
Also dissimilar to the year’s other big votes is that the Italian referendum has seen the status quo preserved instead of demolished, even if those who comprise the ‘No’ side of things have plenty of anti-establishment populist blood pumping through their veins. This is not to say that everything in Italy is hunky-dory; its banking sector is still in trouble, while the country currently lacks a leader. However, from a market-perspective at least, investors have seemingly decided that last week’s hand-wringing was a bit overdone.
Looking to this afternoon and, following a morning of understandably ignored European services PMIs, the US throws its own data-figure-hat into the ring with the Markit and ISM readings. The former is expected to be revised higher to 54.9, while the latter is set to jump from 54.8 to 55.3 month-on-month. The Dow Jones seems happy enough at the prospect of this good news – that, alongside the positive swell seen in Europe, has the index’s futures suggesting an 80 point, all-time high smashing increase after the bell.
