The forced collapse of the Italian populist government sent European stocks and the euro plunging downward Monday.

President Sergio Mattarella made the surprise announcement Sunday that he would refuse to appoint Eurosceptic financier Paolo Savona as economics minister, defying the Italian electorate that had elected a coalition of populist and anti-establishment parties to the Italian parliament. Instead, President Mattarella appointed former IMF director Carlo Cottarelli to lead the country until new elections can be held.

If the move was supposed to settle financial markets, which were supposedly concerned about the would-be populist government, it did not have the anticipated effect Monday. The euro declined against the dollar, dropping to $1.1609, from $1.1645 late Friday, a 0.13 per cent decline.  That is its lowest level since November 2017.

Italian stocks had a wild day. Initially, Italy’s FTSE MIB index rose but then shed all its gains to fall 2.5 per cent to 21,851.74. Stocks also sold off in Spain, Germany, and France. U.S. and UK markets were closed for holidays.

The bond market was also roiled by the political chaos. The Italian 10-year government bond yield rose to 2.68 per cent from 2.36 per cent earlier Monday. Unlike U.S. government bonds, which tend to see yields fall in times of crisis, Italian bond yields rise in times of trouble, making borrowing more expensive for the government. This is likely because Italy uses the euro, a currency it does not control, which makes default a realistic (if not likely) possibility.

Another measure of market stress, the interest-rate spread of Italian bonds over similar German bunds, widened above 2.30 percentage points, the highest since late 2013.

For American observers, the market moves appear to be a photographic negative of the election of Donald Trump. That electoral result was widely predicted to lead to the market plunging. Instead, after a brief dip, U.S. markets soared. In Italy, it was the dangers of a populist government that was supposed to hurt financial markets. Instead, the forced collapse has sent markets plunging.