The unclear political climate caused investors to lose confidence in markets not only in Italy but across the world. Yields on Italy’s two-year bond increased by 1.8 percent and reached a peak of 2.69 percent. This number is especially alarming considering the yield has not crossed 2 percent since 2013. FTSE MIB, a benchmark index closed 2.7 percent down, erasing gains for the year. Across the continent, many large banks suffered losses. Santander lost 5.4 percent, BNP Paribas closed 4.5 down and Commerzbank of Germany dropped 4 percent. Italy’s UniCredit fell 5.6 percent.
The sell-off reached the United States, where large banks including JP Morgan and Citibank lost over 4 percent. S&P 500 also lost 3.6 during the day. With the uncertain future in Italy’s politics, this could be a sign of larger problems to come. The US is wary of a crisis in the eurozone after the experience during some of the recent issues.