Italy Stock Bulls Are Set for Reality Check From Sovereign Risk
- Spread of Italian debt over German reached highest since Jan.
- FTSE MIB is top-performing major European benchmark this year
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Italian stocks have been on a roll this year. But with bond yields rising, recession risks looming and new economic forecasts raising some eyebrows, that may not be able to continue for much longer.
The benchmark FTSE MIB is up 20% this year, outperforming most other major European markets. That’s because the index is dominated by banks, which have benefited from higher interest rates, and because low valuations had attracted buyers. But with sovereign spreads recently reaching almost 200 basis points over German bonds — the widest since January — some now see risks as too much to ignore.