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FTSE MIB Outlook: Coronavirus Outbreak Puts Italian Assets at Risk

FTSE MIB Outlook: Coronavirus Outbreak Puts Italian Assets at Risk

Justin McQueen, Strategist

FTSE MIB Price Analysis & News

  • Italy at Risk of a Technical Recession
  • Italian Bank Sell-off Raises Risk for FTSE MIB

Italy at Risk of a Technical Recession

As the number of confirmed coronavirus cases within Italy continues to rise, the already slowing economy faces the risk of entering a technical recession. Last year, the economy grew a tepid 0.3%, its lowest since 2014 and as things currently stand, the economy could potentially contract in Q1. With over 2000 cases of coronavirus and over 70 fatalities, the Italian government is planning to close schools and universities, which may set precedent for the rest of Europe.

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FTSE MIB: Following last week’s plunge in the index, the rebound thus far has been somewhat shallow, which in turn raises the risk that the FTSE MIB could head lower following the Italian government's measures to contain the virus. Alongside this, while the FTSE MIB has been holding up this week, Italian banking names have continued to sell-off. As such, with the banking sector's weighting of 23% in the FTSE MIB, upside in the index may struggle going forward.

Italian Banks Continue to Sell-Off

Source: Refinitiv

FTSE MIB Price Chart: Daily Time Frame

Source: IG Charts

FTSE MIB Technical Levels

SupportResistance
2152450% Fib22000-
2058261.8% Fib22467 38.2% Fib
20000-22696200DMA

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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