European bourses tracked moderately lower midday Friday as traders weighed the implications of tariff threats posed by the Trump Administration, alongside Europe’s potential shift toward military readiness and its impact on luxury brands. This combination of factors is causing considerable unease among investors.
Tech and retail stocks emerged as the most affected sectors, leading to broad market losses. Notably, shares in luxury fashion house Salvatore Ferragamo plummeted by 16.8% by midday due to these tariff threats and the uncertain outlook for luxury goods as governments across Europe reassess their budgets in light of a more militarized stance. In addition to these developments, investors closely monitored Wall Street futures, which signaled positive movement, albeit with expectations of lower closes following overnight trading on Asian exchanges. Turning our attention to economic indicators, Eurostat reported a modest growth in the Eurozone's gross domestic product (GDP), which rose by 0.2% in the fourth quarter from the third quarter and recorded a growth of 1.2% year-over-year.
Meanwhile, the broader European Union experienced a slight uptick in GDP, rising by 0.4% in the fourth quarter and 1.4% annually. The pan-continental Stoxx Europe 600 Index reported a decrease of 0.7% during the mid-session. Sector-wise, the Stoxx Europe 600 Technology Index fell by 0.7%, with the Stoxx 600 Banks Index dwindling by 0.2%.
Furthermore, the Stoxx Europe 600 Oil and Gas Index decreased by 0.4%, whereas the Food and Beverage Index saw a decline of 0.2%. On the national market indexes, the situation looked gloomy as Germany's DAX slid by 1.6%, while the FTSE 100 in London retreated by 0.4%. France's CAC 40 was also down by 0.9%, and Spain's IBEX 35 recorded a loss of 0.4%.
Moreover, the yields on benchmark 10-year German bonds eased to approximately 2.82%, indicating some investor caution. In commodity markets, front-month North Sea Brent crude-oil futures increased by 1.8%, reaching $70.69 per barrel. Meanwhile, the Euro Stoxx 50 volatility index rose by 8.2% to 23.20, indicating an expectation of above-average volatility within European stock markets over the next 30 days.
This spike acts as a negative signal to traders as a reading above 20 often indicates choppier markets ahead, while figures below this threshold suggest a more stable trading atmosphere..