Italy ETFs strengthened Monday, with Italian markets posting their best daily gains in over a year, as previous anti-establishment concerns diminish.
The iShares MSCI Italy Capped ETF (NYSEArca: EWI) rose 3.7% on Monday. The Italian FTSE MIB Index added 3.4% ended at 22,086.2.
Italian markets jumped after Finance Minister Giovanni Tria assured that the country will remain in the euro currency bloc, Bloomberg reports.
Tria told the Corriere della Sera over the weekend that there was “no discussion” of any proposal to leave the EUR currency.
Head-Off Any Hints at Leaving Euro
“The position of the government is clear and unanimous. There is no discussion about leaving the euro. The government is determined to prevent any emergence of market conditions that would lead to leaving the euro,” Tria said, according to a translated version of the interview on the newspaper’s website.
Italy’s markets were upended at the end of May on speculation of the potential rise of an anti-euro zone faction. The sudden decline in Italian assets intensified on worries that the Eurozone’s third largest state could exit the bloc and may even trigger further breakdown in the euro currency union after the Five Star Movement and the League – two Euroskeptic parties – formed a coalition.
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Tria also confirmed the government’s goal of cutting Italy’s debt this year and in 2019, which helped strengthen Italian banks. Italian current debt exceeds 130% of gross domestic product.
Santander GCB rates strategist Luca Jellinek believed that much of the recent upward moves may have been due to short positions being squeezed out – heavy shorts were forced to buy back into the market and fuel the upward trend.
“There were a lot of shorts in Italy,” Jellinek told Bloomberg. This rally is “way too much.”
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