European stocks nosedive after Spain and Italy crank-up the chaos factor. The major European stock indices severely declined on Monday after reports from Spain and Italy undermined the sense of stability which seemed to have been established in the Eurozone during the past few months (NYSEARCA:VGK).  In Spain, Prime Minister Mariano Rajoy faced calls for his resignation, following reports that Rajoy received €277,000 from an illegal slush fund managed by the Treasurer of Rajoy’s People’s Party (NYSEARCA:EWP). As elections approach in Italy, the absence of a likely majority ruling party or coalition raised fears that the nation could become ungovernable (NYSEARCA:EWI). Bond yields spiked in both Spain and Italy as a result of the news reports and stock prices cratered. As of 11:15 EST, the Euro STOXX 50 Index sank 2.60 percent to 2,639 – staying just above its 50-day moving average of 2,535.  After breaking above its resistance level of 2,700 on January 21, the STOXX 50 is once again experiencing resistance at that level, which has been a barrier since the beginning of the new year.  Its Relative Strength Index is 55.38 (NYSEARCA:FEZ).  The FTSE 100 Index dropped 1.49 percent to 6,251 (NYSEARCA:EWU).  The German DAX Index fell 2.07 percent to 7,671 (NYSEARCA:EWG).  France’s CAC 40 Index dropped 2.70 percent to 3,672 (NYSEARCA:EWQ).  Spain’s IBEX 35 Index took a 3.25 percent nosedive to 7,962 (NYSEARCA:EWP).  Italy’s FTSE MIB Index fared worse, sinking 3.81 percent to 16,658. (NYSEARCA:EWI).   Hot and Cold ETFs for January As of 11:31 EST, the euro declined 0.70 percent against the dollar, trading at $1.3545 (NYSEARCA:FXE). Spain’s ten-year bond yield jumped to 5.39 percent on Monday from Friday’s closing level of 5.20 percent.  Spain’s two-year bond yield spiked to 2.86 percent on Monday from Friday’s closing level of 2.58 percent. (NYSEARCA:EWP). Italy’s ten-year bond yield advanced to 4.50 percent on Monday from Friday’s closing level of 4.36 percent (NYSEARCA:EWI). On London’s ICE Futures Europe Exchange, March futures for Brent crude oil declined by 73 cents (0.63 percent) to $116.03/bbl. (NYSEARCA:BNO, NYSEARCA:USO). April Gold Futures advanced by $5.90 (0.35 percent) to $1,676.50 per ounce (NYSEARCA:GLD). Investors apparently felt good about the Bank of Japan’s report that the nation’s monetary base increased less than expected in January (NYSEARCA:FXY).  The amount of the nation’s currency in circulation (as well as the current account deposits held at the Bank of Japan) rose 10.9 percent in January from December’s 11.8 percent increase.  Economists had been anticipating a 13.2 percent jump.  The Nikkei 225 Stock Average advanced 0.62 percent to 11,260 (NYSEARCA:EWJ). China’s National Bureau of Statistics and the China Federation of Logistics & Purchasing reported that the nation’s official non-manufacturing Purchasing Manager’s Index rose to 56.2 in January from 56.1 in December.  The Shanghai Composite Index advanced 0.38 percent to 2,428 (NYSEARCA:FXI).  Hong Kong’s Hang Seng Index declined 0.16 percent to 23,685 (NYSEARCA:EWH).   Is the China ETF Ready to Soar? American stock index futures trading was in negative territory ahead of Monday’s opening bell as a result of surging dollar strength with the weakened euro.  The March 13 Dow Jones Industrials future fell 0.45 percent to 13,868 as of 9:14 EST.  The March 13 S&P 500 future declined 0.39 percent to 1,500 (NYSEARCA:SPY).  The March 13 Nasdaq 100 future fell 0.44 percent to 2,744. Bottom line:  Unstable political situations in Spain and Italy sent the major European stock indices sinking by multiple percentage points.  The silver lining to the cloud is that the weakened euro could ease fears of a difficult market for the Eurozone’s exports. Sign up for Wall Street Sector Selector’s FREE Stock Market Timing Indicator!    Disclaimer: The content included herein is for educational and informational purposes only, and readers agree to Wall Street Sector Selector’s Disclaimer , Terms of Service , and Privacy Policy before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group, LLC.