The preliminary count at 3:14 a.m. in Rome (9:14 p.m. in New York) shows Italian voters rejecting Prime Minister Matteo Renzi’s referendum on constitutional change by an almost 60/40 margin. If Renzi’s proposals had lost by a narrow margin, he might have stayed on as Prime Minister despite his promise to resign if the referendum lost. But with the vote this lopsided, Renzi will head to the Quirinal palace on Monday to submit his resignation to president Sergio Mattarella.
Which will leave Italy without a government. The next elections aren’t for 14 months. Which will leave any caretaker government in power until February 2018. The populist Five Star Movement and the antii-immigrant Northern League, both seen as winners in today’s referendum vote, probably want an early election but they don’t have any power to make that happen.
Both parties can be called anti-euro as well. And while an Italian withdrawal from the euro would require a constitutional amendment–so this isn’t a replay of Brexit–the vote isn’t good news from Italy’s debt laden banks or the Italian economy as a while. Italy’s deeply troubled Monte dei Paschi, the country’s third-largest bank, is scheduled to try to raise an extra 5 billion euros in capital and to attempt to sell off 28 billion euros of bad loans in refinancing this week.
S&P 500 mini-futures initially fell by 0.5% shortly after electronic trading resumed on Sunday evening. In futures trading, the FTSE100 is expected to dip 0.68% at the open. The euro has slipped to a 20-month low of 1.0575 against the US dollar.
