Italian Markets Slump After Two Years of Sharp Gains With AM-Wall Street Bjt
MILAN, Italy (AP) _ Prices tumbled on the Milan stock market for the seventh consecutive session Tuesday, as the turnaround after two strong years picked up steam on Italy’s biggest exchange.
″Times of easy gains are over,″ said one senior broker after Tuesday’s drop.
The fall brought the Milan market index’s loss for the first two days of the week to nearly 6 percent. The big selloff by domestic and foreign investors knocked the equivalent of $5.3 billion from the market’s stock value.
The index had drifted downward about 1 percent last week, but the decline picked up speed on Monday.
Quickly dubbed ″black Monday″ by the press and market analysts, the week’s opening session saw some some stocks fall by 10 percent and the lira faced renewed speculative pressure against the U.S. and the major European currencies.
A wide range of economic and political factors have been cited by Italian analysts for the slide: fragility of the new coalition government of Christian Democrat Premier Giovanni Goria; disagreements about a stiffer economic policy; worries about the possibility of a worldwide recession; tensions in the Persian Gulf; and the strengthening of the dollar and of oil prices, which would trigger fresh inflationary pressures in Italy.
However, some market professionals said part of the slide stemmed from ″technical″ factors, which they said might be solved by the end of the August trading cycle this Friday when accounts have to be settled.
Paolo Antonelli, a broker for Banca Provinciale Lombarda, noted the proliferation of small investment companies during the steady bullish performances of the two past years.
″Small investment companies have been unable to stand the pressure of a bearish market after the bull period and have been selling heavily to avoid bankruptcy,″ Antonelli said.
Such sales in a declining market touch off new sales, intensifying the drop, he said. ″The market should soon find a new stability but the original euphoria cannot be restored,″ he added.
Bruno Pazzi, head of the Italian equity markets commission, agreed.
″The two major factors behind the market drop are the international worries and the technical settlements,″ Pazzi said.