Asian shares tumbled Monday while Europe opened higher after Italian voters rejected constitutional changes, raising questions over whether the country will stay in the European Union and keep using the euro.
KEEPING SCORE: In early trading, Germany’s DAX added 0.8 percent to 10,599.05 points and France’s CAC-40 gained 0.3 percent to 4,542.94. London’s FTSE 100 advanced 0.2 percent to 6,744.30. On Friday, the CAC-40 fell 0.7 percent, the FTSE 100 finished 0.3 percent lower and the DAX fell 0.2 percent. On Wall Street, futures for the Dow Jones industrial average and the Standard & Poor’s 500 index gained 0.4 percent. On Friday, the Dow lost 0.1 percent while the S&P rose 0.87 points. The Nasdaq composite added 0.1 percent.
ITALY’S “NO”: Italian voters rejected proposed constitutional changes, delivering a stinging defeat to Premier Matteo Renzi and galvanizing the populist opposition. Renzi had said the changes, which would strengthen the administrative branch and reduce powers of Italy’s Senate, were necessary to rejuvenate the economy. He announced his resignation. The rejection was a rebuke to industrialists, bankers and establishment institutions that supported the changes. It raises doubts about whether Italy will stay in the European Union and keep using the euro common currency.
ANALYST’S TAKE: “Risk sentiment has taken a hit from rejection of the Italian referendum,” Citigroup analysts said in a report. The outcome was in line with polls but the heavy margin of rejection is surprising,” they said. “This raises the political risks in Italy and may weigh on its troubled banking sector. This also casts significant doubts over Italy’s membership of the European Union and the future of Eurozone.”
TRUMP WATCH: Donald Trump rattled Beijing by taking a phone call from Taiwan’s president in a break with U.S. diplomatic protocol. China issued an unusually low-key complaint, saying it was a “small trick” by Taiwan, which the communist mainland claims as part of its territory. Washington has close ties with Taiwan but switched formal diplomatic relations to Beijing four decades ago. The call was the starkest example yet of how Trump has flouted diplomatic conventions since he won the Nov. 8 election. He apparently has been speaking with foreign leaders without guidance from the State Department, which oversees U.S. diplomacy.
HONG KONG-SHENZHEN LINK: Market reaction was muted as trading began on a new cross-border stock link between Hong Kong and the neighboring Chinese city of Shenzhen, widening access to China’s markets for global investors. It allows international investors to buy and sell 880 high-growth small and midcap stocks traded on China’s smaller second exchange in Shenzhen via the Hong Kong exchange. A similar link between Hong Kong and China’s main exchange in Shanghai began two years ago.
LI KA-SHING’S DUET: Australia’s DUET Group, a pipeline operator and power distributor, received a takeover offer from Hong Kong billionaire Li Ka-shing’s Cheung Kong Infrastructure that values the company at 7.3 billion Australian dollars ($5.4 billion). A successful acquisition would expand Li’s position in Australian infrastructure. The bid comes amid debate in Australia about a surge in foreign corporate takeovers.
ASIA’S DAY: The Shanghai Composite Index sank 1.2 percent to 3,204.71 and Tokyo’s Nikkei 225 retreated 0.8 percent to 18,274.99. Sydney’s S&P-ASX 200 lost 0.8 percent to 5,400.40 and Seoul’s Kospi gave up 0.4 percent to 1,963.36. Hong Kong’s Hang Seng lost 0.3 percent to 22,505.55 and shares in Manila also fell. Benchmarks in Singapore and New Zealand rose.
ENERGY: Benchmark U.S. oil rose 33 cents to $52.01 per barrel in electronic trading on the New York Mercantile Exchange. The contract jumped 62 cents on Friday to close at $51.68. Brent crude, used to price international oils, gained 45 cents to $54.91 in London. It rose 52 cents on Friday to $54.46.
CURRENCY: The dollar advanced to 113.99 yen from Friday’s 113.50 yen. The euro edged down to $1.0643 from $1.0665.