Following on from yesterday’s eyes on Italy and Austria, we now have the results of the votes.
In Austria, the controversial “far-right” candidate lost.
In Italy, the referendum question was voted down, which is what the market was fearing. The Euro initially fell, but recovered quickly and at the time of writing is trading above Friday’s closing price. The Italian Prime Minister resigned, but the market seemed to welcome that this was done swiftly.
There is a lingering concern as to the solvency of a few Italian banks.
Overall, this is a good illustration as to how “bad” news can often be a good buying opportunity, as the news here initially pushed the Euro to a low level at which it looked attractive. In trading, there is “bad” news, and “very bad” news, the latter of which keeps driving the price in the same adverse direction for days or even weeks on end.
An ability to tell the difference between the two is tough to cultivate, but can really make a difference to your trading results. It is not easy to cultivate that skill unless you read a lot of good-quality financial market press coverage.
