(Bloomberg) — European stocks edged lower on Friday, giving up some of Thursday’s gains but still hovering near record highs as auto stocks weighed on the broader market.
The Stoxx Europe 600 index fell 0.3% by 8:10 a.m. in London after approaching a record high on Thursday following a week of big central bank moves. Most sectors fell, led by autos and technology, while utilities rose.
Among individual stocks, Mercedes-Benz Group AG fell as it cut its financial forecast for this year. The luxury car maker said its business in China was deteriorating rapidly, the latest blow to Germany’s troubled industrial sector. European express delivery companies such as Deutsche Post and IDS also came under pressure after U.S. operator FedEx Corp. warned that its business would slow over the coming year.
The Federal Reserve’s rate cut this week pushed European stocks back near record highs, and strategists surveyed by Bloomberg expect the rebound to continue. However, concerns remain, and strategists believe volatility is likely to persist in the short term.
“We are now entering a historically volatile period in September, a period known for its market volatility,” said Florian Ielpo, head of macro research at Swiss investment manager Lombard Odier.
The economy remains a wild card, with European manufacturing data continuing to show contraction, raising questions about whether the outperformance of defensive stocks over the past few months is running out of steam.
Despite the market’s recent good performance, sentiment indicators such as the VIX or CDS spreads have not yet sent a clear signal. “We are not there yet,” Ielpo said. “This suggests that investor confidence may not have fully recovered, and it is still wise to maintain a certain degree of caution.”
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