Eurogroup Meetings Fail To Deliver Result

<h2>Divisions Stall Progress</h2>
<p>On the back of the emergency Eurogroup meetings yesterday, which ran long into the small hours of the night, European ministers announced today that they were unable to agree a deal. The talks had been aimed at establishing a course of action to provide economic support for those Eurozone economies worst affected by the virus.</p>
<p>Talks reportedly stumbled as Italy and the Netherlands clashed over the conditions surrounding any Eurozone credit which could be provided. Sadly for Italy, which has been devastated by the virus, this means that around 500 billion Euros worth of aid is yet to be approved.</p>
<p>Writing on Twitter this morning, Mario Centeno, the Eurogroup president said: “After 16h of discussions we came close to a deal but we are not there yet. I suspended the Eurogroup &amp; continue tomorrow, thu. My goal remains: A strong EU safety net against fallout of covid19 (to shield workers, firms &amp;countries) &amp; commit/ to a sizeable recovery plan”.</p>
<p>European leaders have come under criticism for their inability to effectively address the crisis. Yanis Varoufakis who was at the centre of the Greek debt crisis wrote on Twitter”.</p>
<h2>European Leaders Criticised</h2>
<p>With the European union still heavily in the throes of the COVID-19 outbreak, the need for emergency relief is growing at a fast pace. Varoufakis is certainly right in saying that the current disagreements echo those we have seen in the Eurozone before.</p>
<p>The main issue for how to proceed comes back to the handling of debt mutualisation and the so-called “coronabonds” between the Northern (more prosperous states) and the rest of the EU. Countries such as France, Italy and Spain are calling for coronabonds while the Northern countries prefer to use the European Stability Mechanism. Given that a move towards debt mutualisation is, as always, more of a political issue, it is unlikely that we will see much progress in this area.</p>
<h2>Market Reaction</h2>
<p>The main market reaction today has been seen in Italian bonds which saw a more than 20 basis point jump in yields. Spreads between Italian and German benchmark bonds have started to widen again also reflecting the disconnect between Northern and Southern states during the crisis. EURUSD, however, has not been to affected. Expectations of a positive outcome were not built up and for now, focus is away from any fiscal solution and more attached to risk appetite. With the dollar softening amidst a broader risk recovery, EUR should remain supported.</p>
<h2>Technical View</h2>
<p><strong>FTSE MIB/ Italian Stock Market  (Bullish above 17814.29) </strong></p>
<p>From a technical viewpoint. The FTSE MIB has been recover firmly since mid-March with price trading in an ascending triangle pattern against the 17814.29 resistance level (monthly pivot). If price can break back above here the yearly S1 at 19593.51 will be the next topside objective for bulls.</p>
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