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Market Extra: Italy delivers a ‘worst-case scenario’ — but here’s what’s reassuring investors

Before Italy’s general election in March, strategists said the worst-case scenario for equity markets would be an anti-establishment coalition government.

That feared result is exactly what the country’s political system has delivered.

Giuseppe Conte is on track to become the new prime minister, with a pair of populist parties — the 5 Star Movement and the League — picking the little-known law professor as a compromise candidate to head their coalition. Conte isn’t getting a honeymoon period, with one critic this week already deriding him as a “a perfect Mr. Nobody, a perfect useful idiot.”

The new government represents “the worst-case scenario,” with its plans worrying investors, but there are some reassuring factors, said Seema Shah, an investment strategist at Principal Global Investors.

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