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Markets around the globe took a beating on Tuesday due to investors being worried about the rising political tensions in Italy. The political crisis in the country could lead to the nation’s withdrawal from the Eurozone, which would follow in the footsteps of Britain, a country that voted to leave it 2 years ago.
Investors sold out of bonds in southern Europe, and the Italian banks and stock markets were jittery due to concerns that Italians may do away with the euro. In terms of some of the worst performances in European stock markets, the Italian and Spanish markets suffered losses of around 2.5%. Stocks in Britain and Germany under performed as well, which was quite expected with the sour news from Italy.
The Dow Jones industrial average closed down 391 points, a slight improvement from the lowest point of the day which was a drop of 505 points. Along with the Dow, the S&P 500 also suffered a loss, as well as the Nasdaq Composite and the Russell 2000.
In terms of this year as a whole, the Dow Jones industrial average is down 1.45%, while the S&P 500 so far stands at a slight gain.
Continuing with the US market, financial stocks took the largest beating, with JP Morgan Chase dropping 4.2%, Goldman Sachs down 3.4%, and American Express sinking 3.3% in late-day trading. Coca-Cola was the only Dow stock finishing in the green instead of the red, barely keeping positive ground before the closing bell.
With regards to the anxiety in the marketplace, billionaire investor George Soros added to the negative sentiments, stating that he believes the globe is headed for yet another financial crisis. The hedge fund manager and philanthropist cited increasing negativity towards the European Union, the United States withdrawing from the Iran Nuclear Deal, and a rising dollar as recipes for a worldwide financial disturbance.
On CNBC Tuesday morning, economist Mohamed El-Erian also shared negative views towards the globe’s overall financial future, stating that the seeming worldwide economic boom may not be exactly what most people thought.