European stock exchanges experienced a notable uptick on Friday, buoyed by reports indicating that a government shutdown in Washington has been averted thanks to the actions of US legislators. Moreover, there are significant developments regarding a potential ceasefire as US and Russian diplomats engage in discussions concerning the ongoing conflict between Ukraine and Russia. Leading the gainers were retail, banking, and technology stocks, while the real estate sector displayed a more subdued performance, lagging behind its counterparts in terms of growth. Investors turned their attention to Wall Street futures, which were signaling positive movement, alongside a diverse upward trend in overnight trading across Asian markets. In the realm of economic data, there were encouraging signs from Italy, where industrial production saw a rise of 3.2% from December to January.
However, this was coupled with a year-on-year decline of 0.6%, as reported by Italy's national statistics agency, Istat. Across the UK, industrial production showed a downturn, falling by 0.9% month-over-month in January. Year-over-year, the decline was noted at 1.5%, according to the Office of National Statistics. The Stoxx Europe 600 Index, a pan-European benchmark, witnessed a mid-session increase of 0.7%.
Notably, the Stoxx Europe 600 Technology Index increased by 1.5%, while the Stoxx 600 Banks Index rose by 1.8%. The Stoxx Europe 600 Oil and Gas Index followed suit with a modest increase of 0.3%, and the Stoxx 600 Europe Food and Beverage Index inclined by 0.1%. In contrast, the REITE, which represents a European REIT index, experienced a slight decrease of 0.1%.
Yet, the Stoxx Europe 600 Retail Index showed resilience by increasing by 0.9%. Reviewing the national market indexes, Germany's DAX displayed an upward shift of 1.4%, while the FTSE 100 in London rose by 0.6%. Paris's CAC 40 gained 1%, and Spain's IBEX 35 saw an increase of 1% as well. In the bond market, yields on the benchmark 10-year German bonds rose, nearing 2.91%, marking the highest level since 2011.
In terms of commodities, front-month North Sea Brent crude-oil futures increased by 0.9%, reaching $70.51 per barrel. Meanwhile, the Euro Stoxx 50 volatility index experienced a drop of 2.6%, settling at 21.08. This figure indicates an expected above-average volatility for European stock markets over the next 30 days, which some analysts interpret as a negative signal.
Generally, a volatility reading exceeding 20 suggests more erratic markets on the horizon, contrasting with a reading below 20 that implies a calmer trading environment..