Italy vote rocks markets

Outside a polling station in Rome, business owner Raffaele Pasquini, 37, told AFP he had voted “Yes” in the interest of his two-year-old son.

Italian Prime Minister Matteo Renzi’s heavy referendum defeat on Sunday has left the country facing political and economic uncertainty.

5-Star won a major breakthrough after winning mayoral elections this summer in the capital Rome and the northern city of Turin and may get a further boost in support in the wake of the referendum.

(Angelo Carconi/ANSA via AP).

According to media reports, with most ballots counted, the NO vote against the change of the constitution was leading with 60 percent against 40 percent for YES.

“I take full responsibility for the defeat”, Renzi said in a televised address to the nation, saying he would hand in his formal resignation to President Sergio Mattarella on Monday. However, after Renzi’s defeat on Sunday, it is unclear whether an election will be held sooner.

The “No” camp, which beat him in the polls, was led by the the Five Star Movement, a party founded in 2009 and led by comedian Beppe Grillo. In accordance with a promise he made before the vote, Renzi also announced that he intends to resign.

But that course is already facing opposition.

Grillo called for immediate elections and said that from next week the party would begin putting together a policy platform and a cabinet team so that Italians would have all the information they needed to put the party into power.

A “yes” vote would have handed powers back to Italy’s regions, making the parliament’s lower house – the chamber of deputies – more powerful than the senate.

“I spoke to him this morning and we agreed that at this juncture it’s hard for the Italian government to commit now to take additional measures”, he said.

“As was clear from the start, my experience in government ends here”.

“Italy is a solid country that is anchored in European construction”, French Finance Minister Michel Sapin said.

But Pierre Moscovici, the European Commissioner for Economic Affairs, warned against turning the Italian referendum result into a “psychodrama”, insisting it was not an anti-EU vote.

The main stock index in Milan was volatile. Those talks were reportedly being reviewed Monday, when the bank’s shares were down 3.1 percent.

LONDON (AP) – Italy’s political upheaval has raised questions of whether the eurozone is headed for a new financial crisis that could once again put in doubt the future of the euro and roil global markets.

Markets broadly expect the European Central Bank to extend its asset-purchase programme for six months, but it is unclear whether it will keep up purchases of 80 billion euros per month or scale back its bond-buying programme. It is expected on Thursday to decide to extend that program beyond its current end date of March. Renzi’s government had embarked on a series of reforms aimed at boosting growth and prosperity. The country has public debt worth 130 percent of GDP, a huge sum. It’s also far short of the 7 percent rate that in 2012 had created fears that Italy might default and fall out of the euro.

Losses at the start of trade, were understandably led by Italy’s financial sector, where numerous banks – particularly the world’s oldest, Monte dei Paschi di Siena – are under severe pressure thanks to an enormous surfeit of bad loans, and a desperate need to recapitalise. “Renzi is now considered a representative of the system”.