US open: Stocks higher as investors shrug off Italian referendum result

US equity markets were on the front foot on Monday, largely shrugging off the ‘no’ vote from the Italian referendum on constitutional reform and the resignation of its Prime Minister Matteo Renzi.

The Dow Jones Industrial Average rose 0.45% to 19,256.16 points, the S&P 500 increased 0.66% to 2,206.47 points, and the Nasdaq gained 1.01% to 5,308.69 points at 1527 GMT.

Meanwhile the main European indices were mostly higher, but Italy’s FTSE MIB swung low by 0.32% amid worries about the impact of political instability on the country’s banks.

Philippe Waechter, chief economist at Natixis AM, said: “The markets’ reaction was not extreme. The euro fell below the 1.06 mark against the dollar, while the equity markets in Asia saw only on a moderate drop, with Tokyo closing down 0.8%. Yields on Italian bonds rose, wiping out the drop seen at the end of the week.

“Investors are adopting something of a wait-and-see attitude, which is reassuring in one sense as there is no major backlash following the result. But the whole affair is far from over.

“Matteo Renzi will present his resignation, which will very probably be accepted, and in the meantime, the current government can no longer operate effectively following yesterday’s result. Italian president Sergio Matarella will have to consult and appoint a new prime minister to form a new government, and this could be Renzi. This whole process will take several weeks.”

In currency markets, the dollar was trading up 0.49% to 0.9329 versus the euro, which steadied after falling to a 20-month low against the greenback in Asian trading on the referendum result. It was up 0.63% to 114.23 against the yen and rose 0.1% to 0.7864 versus sterling.

In commodity markets, oil prices advanced, Brent crude nudged up 0.76% to $54.85 per barrel, while West Texas Intermediate crept 0.61% to $52.05 at 1430 GMT.

Gold on Comex ticked down 0.75% to 1,1698 per troy ounce at 1432 GMT.

On the data front, the US services sector slowed in November. Markit’s services purchasing managers’ index slipped to 54.6 from 54.8 in October, but remained above the 50 no-change value for the ninth consecutive month.

Whereas the ISM non-manufacturing composite increased to 57.2 in November, from 54.8 the previous month and ahead of the 55.5 forecast consensus.

Elsewhere, Bloomberg reported that the Federal Reserve’s William Dudley said he approved higher interest rates over time as the economy gradually improves.

Speaking ahead of the next committee meeting on 13/14 December, he said: “Assuming the economy stays on this trajectory, I would favour making monetary policy somewhat less accommodative over time by gradually pushing up the level of short-term interest rates.”

In corporate news, technology giant Apple down 0.74% after writing a letter to US regulators offering feedback on proposed guidelines for self-driving cars.

Rexnord Corp crept up 0.05% as President-elect Donald Trump criticised the manufacturer’s plans to relocate an Indianapolis factory to Mexico.