ROME - The Italian stock market took a hit amidst the political chaos on Monday with trading in shares of leading Italian banks being suspended as speculation heightens that the country may be entering a dark period. The request for the impeachment of the head of state and the uncertainty surrounding the duration of a potential new government, led by Carlo Cottarelli, have furthered the growing feeling of doubt and insecurity.

 The difference between ten-year BTPs and German Bunds, hit and exceeded 230 points, a peak that had not been reached since 2014. It then proceeded to fall following Cottarelli’s speech.

 The Financial Times declared that “Italy is heading towards a possible institutional crisis” and have predicted that "political uncertainty will remain elevated" due to Italian President Sergio Mattarella’s decision to reject the appointment of Paolo Savona as finance minister.

 According to a Bloomberg report, Bank of America advises to “stay at the window” given the “unpredictable nature” of Italy’s current political condition.

 The situation at Barclays “is still fluid, the uncertainty is high and the market liquidity is low.”

 Intermonte, the major independent investment bank, maintains that a “recovery” of Italian government bonds is possible, however “the potential political risk in Italy remains high and early elections would risk giving a strong majority to the anti-establishment parties.”

 Given the current volatile nature of the political system, the advice as to how to proceed will come as the situation unfolds and a definitive “result” is accepted.

 Fidentiis Equities said, "The market could hit a rebound today but we do not think it is sustainable as the risk premium in Italy will remain high until the new elections."

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