European bourses continued their downward trend midday Tuesday as traders absorbed the implications of the Trump Administration's proposed import tariffs on Canada, Mexico, and China, while also considering the ongoing developments in the Ukraine-Russian conflict. In a somewhat contrasting move, food stocks defied the overall market downturn to post gains, yet sectors like banking, technology, and oil faced significant pressure. Market participants also monitored mixed signals from Wall Street futures, particularly in light of lower closing figures across Asian exchanges overnight. In fresh economic updates, European Commission President Ursula von der Leyen unveiled her ReArm Europe initiative.
This plan offers member nations increased fiscal flexibility to finance defense expenditures and introduces a substantial 150 billion euro ($158 billion) loan facility aimed at facilitating investments in defense projects throughout the region. The Stoxx Europe 600 Index plummeted by 1.2% mid-session, highlighting the widespread market concern. Delving deeper into sector performance, the Stoxx Europe 600 Technology Index fell 2.2%, while the Stoxx 600 Banks Index experienced a notable decline of 2.9%.
Additionally, the Stoxx Europe 600 Oil and Gas Index retraced by 2.8%, in stark contrast to the Stoxx 600 Europe Food and Beverage Index, which managed to achieve a modest 1.1% gain. Meanwhile, the REITE, an index tracking European Real Estate Investment Trusts (REITs), decreased by 0.4%, alongside a 1% decline in the Stoxx Europe 600 Retail Index. Looking at national market indexes, Germany's DAX showed a downturn of 2%, while the FTSE 100 in London edged down by 0.3%.
The CAC 40 in Paris noted a 1.2% decline, and Spain's IBEX 35 followed suit with a fall of 2.2%. In the bond market, yields on benchmark 10-year German bonds retreated, hovering around 2.47%. In commodities, front-month North Sea Brent crude oil futures dropped by 1.3%, settling at $70.72 per barrel. The Euro Stoxx 50 volatility index experienced a significant uptick of 8.5%, rising to 20.95.
This movement reflects a forecast of modestly above-average volatility for European stock markets over the next 30 days, signaling potential market turbulence ahead. Generally, a reading above 20 suggests choppier trading conditions looms, while levels below 20 indicate a more stable market environment..