Italian stocks face vote test

While most western-European markets have recovered from the Brexit shock, Italy still has a long way to go. With a looming referendum and an ongoing banking crisis, traders are paying up to hedge against more stock turbulence.

Investors suffering the world’s biggest losses this year are bracing for a vote on political reform expected in November that could decide the fate of prime minister Matteo Renzi.

They have pushed the price of options protecting against volatility in Italian equities for the next three months to the highest since 2013 against shorter-term contracts.