European markets were hit hard on Friday, as investors reacted to political turmoil in Europe and overseas.
The pan-European STOXX 600 closed 0.74 percent lower, with the majority of the region’s sectors slipping into negative territory. Italy’s FTSE MIB index tumbled more than 3.7 percent after Rome agreed to set a higher than expected budget deficit target that could put it on a collision course with Brussels.
Looking at sectors across the region, banks were worst performers on Friday, down around 2.6 percent with a number of Italian banks dropping to the bottom of the STOXX 600. Lenders including Unicredit, Banco BPM and Intesa Sanpaolo all fell more than 7 percent.
Italy’s government set a budget deficit target at 2.4 percent of gross domestic product (GDP) over the course of 2019 to 2021. This came following media reports on the same day which suggested that Italy’s populist administration were pressing the country’s finance minister to resign if he didn’t deliver the pledges made during the campaign. A spokesperson for the finance minister however told CNBC the rumors were “fake news.”
Looking at individual stocks, Saab soared more than 8 percent after news emerged that Boeing had secured a $9.2 billion to build Air Force’s next trainer aircraft — and it was partnering with the Swedish manufacturer to do it.
Sticking with strong gainers, shares of Dutch semiconductor company ASM International shot up by over 2.6 percent after Bloomberg reported that Chinese firm TCL was mulling a bid for its remaining stake in its listed Asian affiliate.
Meanwhile, RSA Insurance published a trading update Friday, stating that it had seen a strong third quarter in its international businesses, however it’s U.K. and London market business issued an underwriting loss, which they said was “disappointing” and had negatively impacted overall results. Shares slumped toward the bottom of the benchmark, dropping over 9 percent.
Ryanair expected to see staff members strike across six countries in Europe on Friday. Shares of the airline closed under pressure.
Stateside, the Dow and S&P 500 bounced back to trade slightly higher on Friday, boosted by gains in energy and healthcare companies.
Aside from Italy woes, Brexit continues to be of focus as the deadline for when the U.K. is due to leave the European Union draws closer. British Prime Minister Theresa May has yet to secure a deal with the EU, with important talks expected to take place over the next two months.
Former U.K. foreign secretary Boris Johnson called upon May to scrap the current Brexit proposals, building the pressure on the government to deliver a successful exit from the EU. The Conservatives, which May heads up, are due to hold their annual party conference from Sunday to next Wednesday.
Overseas, domestic U.S. politics has put investors on edge. On Thursday, Supreme Court nominee Brett Kavanaugh appeared in front of the Senate Judiciary Committee, amid multiple accusations of misconduct and a testimony from Christine Blasey Ford, who testified to the committee Thursday that Kavanaugh had drunkenly pinned her to a bed and groped her at a high school gathering in 1982. The Judiciary Committee is expected to vote on Kavanaugh’s nomination to the Supreme Court on Friday morning.
In economic data, euro zone inflation data was released Friday. Figures showed euro area inflation increased to 2.1 percent in September, but that core inflation disappointed, receding to 0.9 percent. The euro fell over half a percent versus the dollar to $1.1576.