Prospects of a hung Parliament in Italy and its attendant effect on the Euro and the Eurozone sent world stocks reeling o Monday.
It was the biggest decline in stock prices since November, as concerns again emerged that Europe’s debt worries, which had seemed to recede to some extent, was brought to the fore again.
The slowdown in Europe and the debt problems, which just refuse to go away, has been a huge overhang in the revival of the world economy including the United States.
The benchmark Standard & Poor’s 500 Index plunged to its lowest close since January 18 while the CBOE volatility index rose 34 percent, the biggest jump in more than 18 months.
As results of the elections in Italy pointed to a hung parliament and confirmed the anti-establishment Five Star Movement led by a comedian-turned-politician, it sparked off fresh fears over the future of the Euro, which has already been shaky in recent months.
According to reports, neither the left nor the right had managed an outright majority in the upper house, where the balance will be held by Beppe Grillo’s Five Star Movement (M5S).
Towards the fag-end of the trading session in Wall Street the S&P 500 fell below the crucial 1500 support-level and for the first time since February 4, the index closed below that mark.
The Dow Jones Industrial Average(INDEXDJX:.DJI) dropped 216.40 points, or 1.55 percent, to 13,784.17 at the close. S&P 500(INDEXSP:.INX) lost 27.75 points, or 1.83 percent, to 1,487.85. NASDAQComposite(INDEXNASDAQ:.IXIC) fell 45.57 points, or 1.44 percent, to 3,116.25. However, the fear index iPath S&P 500 VIX Short Term Futures TM ETN(NYSEARCA:VXX) soared 13.70%.
The equities market had a strong start to the year but has not been able to sustain the momentum.
The FTSEurofirst-300 index of top European shares edged up 0.04 percent and Italy’s main FTSE MIB ended up 0.7 percent after earlier gaining nearly 4 percent.