Italy is a worry, but there's no need to be concerned about 'Itexit'

SO far this year, geopolitical developments have been having a significant impact on investment markets. Most of these revolve in some way around President Donald Trump and the US: with the threat of a trade war between the US and China (although "constructive" talks between the two add to confidence that a trade war will be averted), the Mueller inquiry concerning his campaign's links to Russia (but like many such inquiries seems to be looking at other things too), the US decision to reimpose sanctions on Iran (and a resultant rise in oil prices), and recently (mostly) good news regarding North Korea.

Away from the US, the other major geopolitical risk on investors' radars at present concerns Italy. Last year, the big concern was that the 2016 Brexit vote and the Trump victory presaged a surge in support for populist Euro-sceptic parties in elections in the Netherlands, France, Germany and Austria, and that an independence vote in the Catalan region of Spain would also pose a threat, all contributing to increased risk of an eventual Eurozone break up. In the end, no such thing happened.

This year, the concern is that the formation of a populist coalition government in Italy with Euro-sceptic leanings will drive crisis in Italy and potentially threaten the Euro. I must admit that while I wasn't worried about last year's Eurozone polls, the risks around Italy are greater.