Markets Rattled by Political Crisis on Both Sides of the Atlantic

– Political crisis in Washington, DC and in Italy are hammering global equity markets this morning. 

Equities are making up for steep pre-market, although European indices look to close not far up their lows. As of writing, the DJIA is down -0.63%, the S&P500 is down 0.45% and the Nasdaq -0.27%.

– In Italy, ministers affiliated with Berlusconi’s center-right party resigned from the ruling coalition after budget talks broke down on Friday.

European shares were forced lower as PM Letta began arranging for a vote of confidence this week that would have brought down his government. However in the premarket this morning there were reports that as many as 20 PdL senators could form a breakaway party unless Berlusconi softens his stance against the Letta government. It remains unclear whether this would be enough to save Letta’s rule.

– In the US, the Senate is scheduled to convene at 14:00ET and Majority Leader Reid is expected to move quickly to vote on House CR funding bill.

A shutdown remains very possible depending on whether or not the House returns an alternative proposal, perhaps that only strips the medical device tax from Obamacare, for funding the government.

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