Political Troubles in Italy and US Pull Stocks Down

Political Troubles in Italy and US Pull Stocks Down

Stock Markets reacted to the political uncertainty in United States and Italy. Stocks across major world markets closed lower and Dow Jones was down by 0.7 percent. US dollar was also weak compared to Japanese Yen and Euro. Deadlock in the US Congress could lead to government shutdown.

In Italy, the ruling government came under pressure as Silvio Berlusconi withdrew support from Coalition government. Former Italian Prime Minister has called for fresh elections in Italy to have a stable government. Italy has been facing tough times due to economic slowdown. As the financial condition was showing small signs of improvement, the current political trouble could have larger impact on Italian economy.

The fear of prolonged government shutdown led to selloff in stocks in many markets. US Treasuries firmed up. Additionally, the factory output from China seems to go lower in September. The increase in industrial production in China over past few months had cemented investors’ hope about strong economic recovery in Europe and North America.

Gold prices were up by small percentage. At USD 1333 per ounce, market experts are expecting gold to remain firm in days to come.