Markets boosted by China stimulus hints and Italian budget hopes – business live

Rolling coverage of the latest economic and financial news, as
the Shanghai stock market leaps by over 4%

12.55pm BST

Boom! Italy’s prime minister has insisted that his
country will not follow Britain out of the European
Union.

Harking back to George Bush (senior) 30 years ago, Giuseppe
Conte told reporters in Rome to “read my lips”. Italy will not
exit the eurozone despite
the dispute over its budget plans
, he declared.

Prime Minister Giuseppe Conte defended on Monday Italy’s 2019
budget, which has fallen foul of the European Commission, saying
the failure of previous efforts to stimulate the economy meant a
new approach was needed.

In a wide-ranging news conference, Conte said he wanted
constructive dialogue with the Commission over the contested fiscal
package, and predicted that growth would “take off” once
government reforms were implemented.

Italy’s PM Giuseppe Conte now at the Foreign
Press Association in Rome defending Italy’s budget proposal. ‘Read
my lips: There will be no Italian Brexit (#Italexit),
but Europeans are dissatisfied and we need to relaunch Europe.’

#Italy
@GiuseppeConteIT
#EU
https://t.co/oMAh9ggz9L

Italy premier
#Conte
: “read my lips: Italy won’t leave the European Union”.
pic.twitter.com/xrAXlEc6W6

12.18pm BST

Economics students at Liverpool University are studying
the Italian situation today, and make an important
point.

Italy may be relieved to still have an ‘investment-grade’
credit rating, but that doesn’t remove the dangerous feedback
loop between the banking sector and the government…

Moody’s decision to downgrade Italy to one level above junk
status has, so far, not triggered panic. In fact, Italy’s
borrowing costs
wend down.
There is a good reason for this. Investors are
relieved to see Italy avoiding a junk status because Moody’s is
considered more conservative (in the sense that it gives more
inferior ratings) than other Rating Agencies.

Since Moody’s has not relegated Italy to junk status, it is
more likely than not that other Rating Agencies won’t push Italy
to the ‘junk abyss’.

So any further stress to Italian yields will be transmitted
immediately to Italian banks which will then increase the risk of
severe contagion effects to Eurozone’s periphery…

Source: FS – All-News2-Economy
Markets boosted by China stimulus hints and Italian budget hopes – business live