Italian general election 2018

The Italian general election of 2018 is over and a hung parliament looks likely. Learn about Italy’s recent vote and discover what to watch out for as the markets digest the result.

What are the results of the Italian general election 2018?

Results from Italy’s interior ministry show that no single party or coalition has won a sufficient share of the vote to form a government, with the vote split between:

Centre-right coalition (37%)

  • Chamber of Deputies: 37%
  • Senate: 37.5% 

A group of right-wing parties dominated by Silvio Berlusconi’s Forza Italia (FI) and the eurosceptic North League (LN)

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Five Star Movement (31%)

  • Chamber of Deputies: 32.7%
  • Senate: 32.2%

M5S - a eurosceptic populist party that believes in direct democracy 

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Centre-left coalition (23%)

  • Chamber of Deputies: 22.9%
  • Senate: 23%

A group of pro-Europe left-wing parties led by the Democratic Party (PD)

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As a result, Italy finds itself with a hung parliament and now enters a period of political uncertainty which is likely to see one or more of these groups attempt to form a ruling coalition. This process could take weeks or months to come to fruition, as it is likely to require careful negotiation with minority parties. In the meantime, the uncertainty could wreak havoc with certain markets by undermining trader confidence in the country’s future policies and economic direction.

Why does the result of Italy’s election matter to traders?

With the result of the 2018 Italian election split, many traders will be paying close attention over the coming weeks and months to how the situation plays out.  It is yet to be seen whether Italy will be left with a long-term hung parliament (and the ensuing political deadlock) or if a coalition can emerge. 

Whatever happens, the events of the next few weeks will determine the political and economic direction of Italy – the fourth largest economy in Europe – with potential knock on effects for the rest of Europe, making it potentially pivotal for the markets.

How could the Italian election affect the markets?

The election result – and the resulting political fallout – could affect a wide range of markets, including:

Indices and shares

The FTSE MIB (Italy 40 on the IG platform) fell 1.5% in opening trading on the Monday after the election. Many of its constituent companies are highly exposed to the Italian economy, so it is likely to feel the effects of political uncertainty and a lack of government stimulus in the coming weeks. 

If the euro falls, banks and financial services firms such as Banca Monte dei Paschi di Siena and UniCredit could struggle, but net exporters like the pharmaceutical companies may benefit.

Remember, the DAX, CAC 40 and FTSE 100 were all up in the immediate aftermath of the ‘no’ vote in the Italian referendum of 2016, suggesting they could be beneficiaries of any political turmoil in Italy.

Markets Bid Offer Change
Germany 30
France 40
FTSE 100
Spot Gold
High Grade Copper

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The euro could be volatile in the coming weeks given the political instability and the popularity of eurosceptic parties. Its pricing is likely to be affected by how coalition talks progress and which parties finally come to the forefront of Italian politics. Watch euro pairs like EUR/USD and EUR/GBP, and be ready to react to the news.


Safe-haven commodities like gold and silver are likely to act counter to market sentiment on the euro, rising in value if it falls and vice versa. The effect of the election on other commodities however is likely to be more limited, except if a newly elected government announces policies that are likely to have an impact. For example, materials used in manufacturing and construction projects – like aluminium and high grade copper – could rise if EU austerity measures come to an end and infrastructure projects are announced. 

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Who were the main winners in the Italian general election 2018?

The vote was fragmented, with no individual party gaining sufficient support to take a majority of seats. A hung parliament or coalition government are now the most likely outcomes, making it difficult to predict who will emerge as prime minister. In fact, many parties have yet to even name an official candidate for the position, understanding that this is something that may need to be negotiated when forming a coalition (the premiership needs to be voted in by the newly elected senators and representatives, in conjunction with the Italian president). 

This year’s vote was split between three main groups:

The centre-right coalition is made up of parties that pursue moderate right-wing policies. Its main two parties are Forza Italia (FI) and North League (LN). The coalition aims to introduce a flat rate of tax, end EU austerity programmes and revise European treaties, create new jobs and repatriate illegal immigrants, though it is divided on whether Italy should remain part of the euro and keep its budget deficit within EU limits. The coalition is led by Silvio Berlusconi (leader of Forza Italia), who is currently banned from office due to a tax fraud conviction, which is under review at the European Court of Human Rights. In his absence, the parties have agreed that whoever wins the most votes should nominate the prime minister.

Possible contenders for prime minister:

  • Leonardo Gallitelli (a former commander-in-chief of the army)
  • Antonio Tajani (president of the European Parliament) 
  • Matteo Salvini (leader of the North League)

Five Star Movement (M5S)

The Five Star Movement is an anti-establishment and moderate eurosceptic party, which promises direct democracy and allows its members to choose policies (and leaders) through an online system called Rousseau. Key policies are to reduce taxation and immigration, change banking regulations to protect citizens’ savings and end European austerity measures to improve investment in infrastructure and education. Luigi Di Maio, the party’s 31-year-old leader, has commented that he may propose leaving the euro as a last resort, if the EU does not accept reforms that allow Italy to implement this programme.

Prime minister candidate:

  • Luigi Di Maio (vice president of the Chamber of Deputies) has been confirmed as M5S’s candidate for the premiership

Centre-left coalition

The centre-left coalition is made up of parties that pursue moderate left-wing policies. The main party in this group is currently the Democratic Party (PD), which aims to create additional jobs, keep Italy within the EU, increase investment in education and training, and maintain a relatively soft approach to immigration. The party is led by former Prime Minister Matteo Renzi, who is unlikely to take office again even if they win due to dwindling support.

Possible contenders for prime minister:

  • Paolo Gentiloni (Italy’s current prime minister)
  • Marco Minniti (interior minister)
  • Carlo Calenda (minister of economic development)

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