Of course, the bad omens in the financial markets have settled in Italy. As a consequence of the new government that is to be formed between the 5-Star Movement and La Liga. To the point that the risk premium with respect to Germany has reached 185 points and the difference between what Rome and Madrid pay reaches its maximum in six years. In any case, there is one thing very clear and it is that this new political factor can influence your investment from now on. Not only with regard to equities, but also fixed income and even alternative investment models.
The current scenario that comes at the moment political life in Italy can have a substantial reflection on your investments. At least as far as the short term and to the point that it can make you lose or earn money depending on the strategy you are going to use from now on. One of the first repercussions it can have is in the equity markets. As is happening these days, despite the fact that the movements are not being very intense, as anticipated from the beginning by the different agents and financial intermediaries.
In this sense, you cannot forget that the Italian economy is the third of the European Union and everything that happens in it can have direct and immediate effects on the Spanish. Its inter-independence is maximum and all that happens in the Italian markets in the end moves to the national ones. On the other hand, the impact it can have on community institutions is also very important and you must mediate your operations so that the economic contributions that you use to make your savings profitable from now on do not evaporate.
How does what happens in Italy affect you?
It is about a government that is not to the liking of the financial markets and therefore their response cannot be anything positive, as is logical to understand. One of the most affected financial markets is undoubtedly the stock market. These days the Italian is the most punished of all the indexes of the old continent. With depreciation of around 1%. With regard to the Spanish equity index, the Ibex 35, the movements have hardly been noticed in these days of tension among financial agents. And it has only given up a few percentage points.
Although of course the worst for the stock markets may come in the coming days or weeks and depending on the program that the new Italian executive is applying. In this sense, you must be very aware of everything that happens in this part of Europe. Where the values of the financial sector and banks in general can be the most damaging by these political plans developed by the government of Movimiento 5 Estrellas and La Liga. Are not discarded drops in the bag of a certain depth that can take many euros along the way if you open positions in the stock market these days.
Downward movements in the stock market
Of course, it is the most predictable scenario if the two political parties apply their program from now on. In any case, it will be necessary check its duration and intensity to gauge whether or not it is worth risking to open positions in these financial markets. Beyond the technical state that the bags present at this precise moment. A very useful recommendation for these days is to stay away from the markets to analyze what their evolution is from now on.
Another aspect that you should assess is that the volatility it will increase very intensely from now on. With a wide difference between the maximum and minimum prices and that if it can be very interesting to carry out trading operations. However, you will have to bring more experience in the scenario class so that the operations are developed more successfully than on other occasions. Not surprisingly, what some of the famous financial analysts say is that you can lose more than gain by opening positions these days. Do not forget if you do not want negative surprises before starting your vacation.
Reactions in the currency market
Of course, one of the most vulnerable financial assets to this government formation in Italy is currency. To the point that one of the most moving these days. In particular, as regards direct changes between the US dollar and the euro. With very abrupt movements that are being used by speculators to obtain large profits in their operations in the currency markets. Not surprisingly, the strength of the United States currency is being one of the common denominators these days and the news of what happens in Italy.
In another vein, it should also be noted that this very special financial market is very prone to you being able to earn a lot of money in a very short space of time. With a risk in operations that is always latent. To the point that they are not suitable movements for all profiles of small and medium investors. If not, on the contrary, you should have a great experience in this kind of operations in international currencies. Despite its great activity these days and especially with regard to the euro.
Fixed income: the most vulnerable
But there is no doubt that the fixed income markets are the most affected by the turmoil in the Latin country. Not surprisingly, the profitability of the italian voucher it has skyrocketed these days. To the point that it is affecting the profitability of peripheral bonds. This in practice means that investment funds of these characteristics are losing competitiveness as they suffer excessively from this type of movement in financial markets. In this scenario, there will be no choice but to flee from fixed income investment funds based in peripheral countries. Where Italy is one of the most determining focuses.
This class of mutual funds is depreciating with great intensity. With somewhat anomalous percentages that exceed that of variable income investment funds. In this sense, it is safer to position in the stock market than in fixed income at this time. In addition, many of these financial products are combined with other financial assets that can appease the possible losses that may be generated in your positions. You cannot forget that investment funds of these characteristics are one of the great losers of what may happen in Italy from now on.
Find alternative models
Well, given this complicated scenario, it is not ruled out that you opt for a series of investments that are considered as alternatives. To the extent that they can act as refuge values in this political scenario that has been created within the European common space scenario. One of them is represented by the precious metal par excellence, such as the gold. In addition, it goes through a very interesting technical state to assess it in the opening of positions. Not surprisingly, it has a very interesting revaluation potential that you can take advantage of right now.
Another option you have to weather this storm in the neighboring country is materialized through the volatility-based mutual funds. Because they can take advantage of an unfavorable scenario for equity markets. Although with a limitation in the expiration of the positions since you run the risk of stopping yourself, as small and medium investors argue in their jargon. Each time the managers have developed funds of these characteristics and which are marketed under different profitability parameters and why not say it, also as an investment strategy.
Investment in oil
Finally, there is also a reserve to open positions in raw materials such as oil itself, which is developing a very intense bullish rally. With a price close to 80 dollars a barrel. And that you can open positions through oil companies that are listed on the different international stock indices. To the point that it may be one of the most recommended values for this current year. For example, Repsol which is integrated into Spanish equities.
In any case, it is one of the most profitable options if you want to make the savings profitable in the face of the political and social turbulence that can be generated in this important European country. Not surprisingly, the profitability that this financial asset is offering at the moment is in double digits. Something that other types of investments do not provide, not even the stock market in general. Although the worst of all is that it may be a bit late to enter their positions.