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Good morning.

Here’s what you need to know:

Why Italy’s political crisis matters

• The country’s recent political convulsions have raised fears about the future of the euro, the common currency of the European Union, drawing uncertainty far beyond its borders.

By effectively blocking two populist parties from forming a government, President Sergio Mattarella may have laid the groundwork for a new election that could amount to a referendum on the euro. We answered 10 questions about the turmoil in Italy.

Markets dropped sharply on Tuesday (the Standard & Poor’s 500-stock index fell 1.2 percent). That suggests investors think the risk of something calamitous happening in Europe has risen, even if it’s still unlikely. Our senior economics correspondent explains.

• A new Italian election would be horrifically bad timing for the E.U., as several members are in a state of political flux, our chief diplomatic correspondent writes.