European bourses traded moderately lower midday on Friday as traders exercised caution following recent equity rallies. The mood was influenced by declining New York futures and a tempered profit forecast from auto giant Mercedes-Benz. As investors digested this news, tech, oil, and retail stocks emerged as the leading decliners, while bank shares saw slight gains.
The decline in Mercedes-Benz shares, which fell by 6.6% in Frankfurt, was a direct response to the company's announcement that it was revising its profit forecast for the fiscal year 2024. The reassessment came in light of softening market conditions in China, a key region for automotive sales. In the broader market, the pan-continental Stoxx Europe 600 Index experienced a 0.7% drop mid-session.
Within sector-specific indexes, the Stoxx Europe 600 Technology Index declined by 1.7%, while the Stoxx 600 Banks Index managed a modest gain of 0.2%. Furthermore, the Stoxx Europe 600 Oil and Gas Index fell by 1%, and the Stoxx 600 Europe Food and Beverage Index was down 0.8%. The REITE, representing European real estate investment trusts, fell by 0.4%, alongside a 1% decline in the Stoxx Europe 600 Retail Index.
Looking at national market indexes, Germany's DAX and London's FTSE 100 both reported declines of 0.7%. The CAC 40 in Paris noted a slightly greater fall at 0.8%, though Spain's IBEX 35 countered the trend with a gain of 0.2%. Meanwhile, yields on benchmark 10-year German bonds rose to approximately 2.21%.
Oil prices saw a decrease as front-month North Sea Brent crude-oil futures dipped by 0.4%, now priced at $74.58 per barrel. In terms of market volatility, the Euro Stoxx 50 volatility index rose by 2.1%, reaching 15.75. This figure suggests a below-average anticipated volatility for European stock markets over the forthcoming month, presenting a somewhat optimistic outlook for investors.
Typically, a volatility reading above 20 signals potentially choppier market conditions ahead, while a figure below 20 indicates a more stable trading environment..