WSJ City: Italy's 'No' Vote Hits Euro, Banks Face Pressure, ECB's Latest Test

Good morning from London. Here's essential reading today from WSJ City. For updates throughout the day, you can download WSJ City for iPhone here or Android here . You’ll need to open this email on your mobile device to do this. You can sign up to receive this briefing direct to your inbox here.

MUST READS FROM WSJ CITY

Italian Prime Minister Matteo Renzi admitted defeat after exit polls showed voters had rejected a plan to overhaul the country's legislature.

Renzi's plan to resign comes at a critical juncture for the European Central Bank.

Italy's 'No' vote is likely to stir fresh turmoil for the country's banks.

The referendum result marks a sobering start for what could be a defining year for the European Union.

Austria's centre-left candidate defeated a right-wing populist to win the country's presidential election.

The blue skies of the summer have been replaced by a near-perfect storm for fixed-income investors.

JP Morgan has opened up a lead at the top of Europe's investment banking revenue rankings.

New Zealand's prime minister said he plans to resign, after leading the country since 2008.

Exxon Mobil's CEO is under consideration to serve as Trump's secretary of state.

The Week Ahead: An ECB policy decision, Ecofin meeting, Brexit appeal and other events to watch.

HSBC's debt capital markets bankers are on course for a feat not achieved in at least a decade.

Mortgages are playing a big part of the battle to finalise global capital rules in the Basel Committee.

IN THE PAPERS

Royal Bank of Scotland has reached a deal to pay about 40p a share to settle claims over its 2008 rights issue but has yet to reach a settlement with retail investors. The Times (£)

Prudential is reviewing its £45 billion pension liabilities business in a move that could lead to the sale of the division and a potential restructuring of the group. The Times (£)

Theresa May is facing a cabinet split over plans to offer “cash for access” to the single market following Brexit. The Times (£)

May has been urged by leading Eurosceptics to “come clean” on her Brexit intentions and admit the UK will leave the single market. FT (£)

Boris Johnson has played down the possibility the UK will pay for access to the single market after Brexit but did say that Britain could pay for some elements of ‘European co-operation.’ FT (£)

Britain’s Supreme Court is set to consider whether Brexit can be triggered without a parliamentary vote. FT (£)

The boost that Ireland’s economy will receive from a relocation of businesses leaving the UK is unlikely to offset Brexit’s negative impact on exports and other activity. WSJ

Apple has confirmed for the first time its interest in self-driving-vehicle technology, but it remains unlikely the company will design or build a complete car. WSJ

MARKETS TODAY

The euro skidded to its lowest level in almost 21 months and Italian stocks fell in early trading after the country rejected constitutional reforms.

The euro fell 1.4% to $1.0505 earlier, its lowest level since March 16 last year, but regained some ground to recently trade around $1.0557. The currency was changing hands at $1.0652 in New York on Friday.

Italy's FTSE MIB was recently down 1.3%. The FTSE 100 was little changed while Europe's Stoxx 600 rose 0.6%.

"Markets reacted with a fairly calm head, with a lot of water flown under the bridge already," said Chris Weston, chief market strategist at IG Markets. "There is no panic."

Stephen Gallo, head of foreign-exchange strategy at BMO Financial Group, had already been expecting the euro to lose 1% against the dollar.

"Given the political currents at work in the eurozone, I think it's virtually impossible for pro-integration politicians to finish building the missing architecture of the single currency area," he said. "Eurozone break-up risks are rising."

The broader markets in Asia were lower but pulled back from initial sharp declines. Japan's Nikkei was recently down 0.8%. Futures on the S&P 500 pointed to a 0.3% loss at the open on Wall Street.

COMING UP

CIPS/Markit Services PMI data are published along with UK car registration figures.