European stock markets experienced moderate gains by midday Tuesday, following a report indicating that inflation in the euro area fell below 2% annually in September. This decrease positively influences expectations for a potential easing of monetary policy by the European Central Bank (ECB). Tech and real estate stocks showed gains, while the oil and banking sectors struggled to maintain momentum.
Investors were also monitoring the futures for Wall Street, which indicated green futures, although Asian exchanges faced volatile closes amid thin trading due to the holidays. According to Eurostat, the consumer price index for the euro area increased by just 1.8% in September, down from a 2.2% rise in August.
This signals a shift that may encourage a more accommodative stance from the ECB in the near future. The broad Stoxx Europe 600 Index, tracking major European stocks, was up 0.4% during the mid-session. Specifically, the Stoxx Europe 600 Technology Index rose by 1.3%. However, the banking sector struggled, as the Stoxx 600 Banks Index declined by 0.6%.
The Stoxx Europe 600 Oil and Gas Index saw a decrease of 0.3%, whereas the Stoxx 600 Europe Food and Beverage Index managed to appreciate by 0.7%. In other notable indices, the REITE, which tracks real estate investment trusts in Europe, experienced a gain of 0.9%, and the Stoxx Europe 600 Retail Index rose by 0.3%.
On a national level, Germany's DAX index was up by 0.4%, and London's FTSE 100 experienced a 0.5% increase. Conversely, the CAC 40 in Paris remained flat, while Spain's IBEX 35 faced a decline of 0.5%. In the bond markets, yields on benchmark 10-year German bonds fell to approximately 2.05%. Meanwhile, North Sea Brent crude oil prices for the front-month contract decreased by 0.6%, settling at $71.27 per barrel.
The Euro Stoxx 50 volatility index declined by 1.4% to 17.81, suggesting below-average volatility is anticipated for European stock markets over the next month—an encouraging indication for investors. Notably, a reading exceeding 20 usually indicates more turbulent markets ahead, while a figure below 20 suggests more stable trading conditions..