1. Italy rocked by referendum: Investors are on high alert and markets are volatile after Italian Prime Minister Matteo Renzi said early Monday that he would resign following defeat in a referendum on constitutional reform. Italy now appears headed for a period of political and financial turmoil.
The most immediate concern is a potential banking crisis. Some of Italy’s banks are drowning in bad debt — a legacy of years of economic stagnation — and urgently need to raise new funds.