FTSE MIB index analysis: here’s why Italian stocks are surging

Italian stocks are doing well this year, with the blue-chip FTSE MIB index surging to a record high. It has risen in the last six days and is trading at €39,000. It is up by 14% this year, beating its American counterparts like the Nasdaq 100 and S&P 500 indices that have pulled back and erased their year-to-date gains.

ECB interest rate cuts and spending

The FTSE MIB index, which tracks the biggest companies in Italy, has been in a strong rally this year. This surge has mirrored that of other European indices like CAC 40 and DAX index.

Most of these gains are mostly because of the ongoing monetary policy by the European Central Bank (ECB).

The ECB has delivered five interest rate cuts since last year. It continued its rate cuts this week, slashing them by 0.25%, and hinted that more cuts would happen if the economic growth remains under pressure.

Analysts anticipate more cuts later this year as the European economy prepares for Donald Trump’s tariffs. Trump has hinted that he will move ahead with a 25% tariff on European goods. Those tariffs would affect Italy, a country with a long trade relationship. The two countries do trade worth over $130 billion.

The ongoing ECB interest rate cuts have led to a retreat of Italian bond yields. Data shows that the short-term and long-term Italian bond yields have retreat in the past few months.

The FTSE MIB index has jumped because of the ongoing boost in spending by European governments. Just this week, German bond yields surged after the government hinted that it would boost defense spending.

Top Italian stocks performance

Most companies in the FTSE MIB index have surged this year. The most notable one was Leonardo, the biggest defense company in the country, has jumped by over 75% this year. Leonardo is a top company that focuses on aerospace, defence, and security. 

Its performance has surged as many European countries focus on boosting spending because of Donald Trump. 

IVECO Group, one of the biggest truck makers in Europe, has surged by 71% this year as demand jumped.  The most recent results showed that IVECO Group’s revenue stood at €15.3 billion, while the EBOT jumped to over €982 million. Its stock has also benefited from its defense business. 

Unicredit stock price has surged by 50% this year, as it fires on all cylinders. This surge has continued to woo Commerzbank, the second-biggest German bank.

The other top companies in the FTSE MIB index are Banco Pop Sondrio, Intensa Sanpaolo, Moncler, Mediobanca, Unipol, and Generali. 

On the other hand, the top laggards in the FTSE MIB index are firms like Saipem, Amplifon, Interpump Group, and Stellantis.

FTSE MIB index analysis

FTSE MIB chart by TradingView

The weekly chart shows that the FTSE MIB index has been in a strong bullish trend in the past few years. It has jumped from a low of €20,220 in 2022 to €38,780. 

The index recently moved above the key resistance level at €35,400, the upper side of the inverse head and shoulders chart pattern. It has remained above the 50-week and 100-week Exponential Moving Averages (EMA).

Further, the Relative Strength Index (RSI) and the MACD indicators have done well, pointing to more momentum. Therefore, with the FTSE MIB index moving into the overbought level, there is a likelihood that it will pull back and retest the support at €35,400. 

A break-and-retest pattern at €35,400 would be a bullish sign, raising the possibility that it will jump to the resistance at €40,000.