The looming threat this year comes from Italy and its long-suffering banking sector. The focus on Italy comes after the U. In coming weeks, the situation has the potential to create at least near-term global market turmoil as financial and political risks collide. Italian bank shares have been hammered.

World stock markets tumble as Greece crisis deepens | World news | The Guardian

The focus has been on Siena-based Banca Monte dei Paschi BMPS, That amplified worries about the solvency of BMPS and the Italian banking system, and heightened concerns about a potential showdown between the Italian government, headed by Prime Minister Matteo Renzi, and the European Commission, over new restrictions on government bailouts of the financial sector.

Results of stress tests by the European Banking Authority due on July 29 are expected to shed more light on the capital needs of the Italian banking sector, potentially serving as a spark to renewed financial turmoil. In a word, no.

While Italy was widely praised for reforms in the wake of the crisis, most of the measures were relatively modest, wrote Ben May, lead eurozone economist at Oxford Economics, in a note. In the end, Italy failed to restructure its banks in a meaningful way, May said. Throw in low yields on Italian government bonds and falling interest rates, which weigh on interest income, and it is no surprise Italian banks are suffering. Under new European Union rules, bondholders must take a hit in the event of a public bank bailout.

The rules are designed to prevent leaving taxpayers to foot the bill for bank rescues. The problem is that around a third of bank bonds in Italy are held by household retail investors, noted Silvia Merler, affiliate fellow at Bruegel, a Brussels-based think tank, in a blog post.

Merler explains how there may be wiggle room under convoluted EU rules.

But such compensation, which was seen following the rescue of four smaller banks last December, would still sell fx call option a lengthy arbitration process and may only partially offset the loss to bondholders, Santi said.

The situation presents a difficult dilemma ibs forex como Renzi. A taxpayer bailout will irritate voters, while failing to protect bondholders also would risk a backlash. That would empower the so-called euroskeptic 5 Star Movement, founded by comedian Beppe Grillo, ahead of an October constitutional referendum.

According to the report, Italy is exploring measures that would ag stocks to buy bad loans bought up at favorable rates with bollinger bands 95 from private and state-backed institutions, including an existing stock market eurozone crisis backed bailout fund called Atlante.

Foreign exposure to Italian banks is relatively contained see chart abovenoted Jay Bryson, global chief economist at Wells Fargo Securities, in a note. The stock trader practice worry, analysts say, is that a backlash over a bailout leads voters to revolt, empowering the 5 Star Movement, which has called for a referendum on eurozone membership.

The prospect of a 5-Star led government likely would lead to a surge in bond yields, credit-rating downgrades, further economic slowing and added troubles for banks—a scenario that would likely require Italy to seek assistance from the eurozone, said May of Oxford Economics. As devoluciones finanzas forex result of all this, an Italian government led by the 5 Star Movement might plausibly go into negotiations with its Eurozone counterparts believing that it holds the trump card—namely the threat of a referendum on Eurozone membership.

This would make it difficult for the Eurozone to play stock market eurozone crisis with Italy or kick the can down the is indian stock market overvalued. The electoral cycle in the region will further raise the stakes.

While the French government might be happy to agree to greater burden-sharing, such a deal would be political suicide for Chancellor Merkel in the build up to the German federal elections in William Watts is MarketWatch's deputy markets editor, based in New York. Follow him on Twitter wlwatts. By using this site you agree to the Terms of ServicePrivacy Policyand Cookie Policy.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U. Intraday data delayed at least 15 minutes or per exchange requirements. ET Steelcase shares plunges after company's earnings miss. President takes Georgia victory lap, talks terrorism with Saudi prince.

Sears shares close Wednesday down 5. Penney shares close Wednesday down 5. How big is bitcoin, really? This chart puts it all in perspective. Updated Amazon Wardrobe is another blow to department stores. Oracle soars toward record highs after earnings beat. Cozying up to consumers in the face of competition from Adidas, Under Armour.

Breaking Nasdaq Composite ends higher to buck downtrend. Home News Viewer Video SectorWatch Podcasts First Take Games Portfolio My MarketWatch. Retirement Retire Here, Not There Encore Taxes How-to Guides Social Security Estate Planning Events Columns Robert Powell's Retirement Portfolio Andrea Coombes's Working Retirement Tools Retirement Planner How long will my money last?

Greece’s Debt Crisis Sends Stocks Falling Around the Globe - The New York Times

Economy Federal Reserve Capitol Report Economic Report Columns Darrell Delamaide Rex Nutting Tools Economic Calendar. My MarketWatch Watchlist Alerts Games Log In. New York Markets After Hours Market Snapshot Winners and Losers. By William Watts Deputy markets editor. Stocks Markets NY Stock Exchange NASDAQ. We Want to Hear from You Join the conversation Comment. MarketWatch Site Index Topics Help Feedback Newsroom Roster Media Archive Premium Products Mobile.

Dow Jones Network WSJ. Banca Monte dei Paschi di Siena S. FTSE MIB Index Italy: STOXX Europe Index EUR STOXX: Volume 0 Open