Once upon a time the financial markets celebrated when right-wing governments won elections and sulked when left-wing administrations prevailed. Not in modern Italy. The last thing investors wanted from this week’s Italian general elections was a strong showing for Silvio Berlusconi’s centre-right People of Freedom.

The general view of investors was that the philandering billionaire media magnate was threatening to undo all the good work of the technocrat Mario Monti in restoring stability to Italy’s economy over the past 15 months. The assumption was that a victory for “Il Cavaliere” this week would plunge Italy back into the whirlpool of bond-market panic that prompted Mr Berlusconi’s ejection from office in November 2011.

That was why the Italian stock market jumped and its sovereign borrowing costs declined today when early exit polls put the centre-left party of Pier Luigi Bersani ahead in the race for the lower house. Similarly, that was why many of those gains were surrendered when a later poll showed Mr Berlusconi’s party in the lead for the upper house. Investors pivoted from relief to renewed trepidation at the possibility that Mr Berlusconi could hold the balance of power. The irony of these market gyrations is that Mr Berlusconi spoke more sense on the economy in the election campaign than the other mainstream parties.

The Italian economy has been shrinking since the middle of 2011 and the European Commission expects it to shrink by a further 1 per cent this year. Mr Berlusconi was promising to stand up to Germany, which is insisting Rome imbibe a cocktail of structural labour market reforms and public spending cuts. While most economists approve of these individual ingredients, some regard their simultaneous consumption as a poison that will alienate the Italian population and push the country closer to the eurozone exit.

The financial markets are betting that the economic policy status quo is the surest route to keeping Italy in the single currency. Not for the first time, they may well have got it wrong.