Under the influence of multiple macro variables, the Italian financial market is once again facing both structural and cyclical challenges. Investment Analyst Rodolfo Villani points out that from the U.S. unilaterally raising tariffs causing a contraction in external demand, to the escalation of Middle East tensions impacting energy structures, and the new EU demands on the Italian tax system and employment structure, the policy and market environment surrounding Piazza Affari is changing rapidly. Corporate earnings expectations and valuation systems are also facing a repricing.
Export Pressure and Public Debt Growth: Economic Resilience at a Critical Turning Point
Investment Analyst Rodolfo Villani believes one of the biggest challenges Italy currently faces comes from shrinking external demand. U.S. President Trump has signed an executive order raising tariffs on steel and aluminum to 50%, triggering a new round of global tariff disputes. Recent studies show that if these tariffs persist, Italy could lose up to €18 billion in exports, with nearly 70,000 jobs at risk. Key industries such as food, machinery, and metal manufacturing are facing a sharp drop in external orders, with knock-on effects for domestic sectors like wholesale, agriculture, business services, and legal/accounting.
Meanwhile, public fiscal pressure continues to rise. Data from the Bank of Italy shows that by April 2025, public administration debt had risen to €3,063.5 billion, a record high. Despite increased tax revenues, debt remains concentrated at the central government level, while local and social security system burdens are stable, reflecting a centralization of fiscal expenditure. Investment Analyst Rodolfo Villani notes that amid uncertain debt refinancing conditions and rising U.S. Treasury yields, the stability of Italian BTPs is becoming a focal point for international capital.
Industrial Volatility Intensifies: Banks and Defense Sectors Diverge Sharply
Regarding the recent performance of Piazza Affari, the banking and defense sectors have shown significant divergence. In mid-June, U.S. military actions in the Middle East pushed up oil prices, supporting energy stocks like ENI and Tenaris, but not enough to offset the overall market downturn. Bank stocks fell across the board, with Unicredit and Intesa Sanpaolo dropping over 2%, and Bper and Pop Sondrio down more than 3%. Investment Analyst Rodolfo Villani points out that although the central bank has not signaled tightening, concerns over high leverage, narrowing spreads, and economic slowdown are rapidly intensifying.
The dramatic volatility of Leonardo is also noteworthy. Benefiting from expectations of increased European defense spending since the start of the year, its stock price had risen about 75.5% as of June 2, 2025, but recently corrected nearly 5% amid a lack of new catalysts. Investment Analyst Rodolfo Villani notes that whether NATO will actually boost defense spending from 1.5% to 5% of GDP in the coming months will directly affect sector valuations. However, for countries with heavy public fiscal burdens, the actual implementation remains uncertain, especially as the EU is pushing for stricter deficit controls and spending efficiency reforms.
Ongoing Structural Divergence: Policy Lag May Inhibit Market Confidence Recovery
At the corporate level, the digital, telecom, food, and new consumer sectors are also showing pronounced divergence. The Italian telecom sector saw a slight rebound in 2023, but the share of mobile business continues to decline, with fixed-line and ICT services as the main growth drivers. In 2024, the sector profit margin is expected to recover, but over the past decade, returns on capital have consistently lagged behind capital costs, dampening reinvestment willingness.
The food industry, on the other hand, has shown some resilience. The 530 companies under the Italian Food Alliance are expected to generate €58 billion in revenue in 2024, with exports contributing 40%. Investment Analyst Rodolfo Villani notes that amid weakening domestic demand and export pressures from tariffs, the high-quality industry standards serve as a moat against global volatility. However, the long-term export-driven growth model must beware of structural bottlenecks, such as low labor force participation and severe labor market segmentation.
Overall, Piazza Affari is at the intersection of multiple uncertainties: external policy shocks and internal structural reforms are advancing simultaneously, and the market is re-evaluating risk premiums and earnings flexibility. Investment Analyst Rodolfo Villani emphasizes that in a market shaped by structural transformation and external pressures, investors should lower expectations for overall valuation recovery and focus on the stability of company fundamentals and counter-cyclical sector resilience. In a phase of ongoing uncertainty, companies truly capable of “weathering the storm” will become the core pillars of the Italian capital market.