Italian markets boosted by Napolitano re-election

Italian markets were boosted yesterday by hopes that the re-election of President Napolitano will end the now two-month-old political gridlock, Societe Generale’s Michala Marcussen said today in a research note.

“In his inaugural speech, the President indicated that he only accepted the position due to the deep political crisis and criticised Italian politicians’ inability to deliver on reform and called for a grand coalition. He also hinted that if politicians failed to make progress, he would step down,” the economist said.

Meanwhile, Berlusconi has already indicated his willingness to form a coalition with the Democratic Party, and following the resignation of Bersani chances for such an outcome have increased.

“Ultimately, policy matters most. Our concern remains that a new government will struggle to deliver entailing a significant risk of a new election in 2013,” Societe Generale said.

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