European equities edged higher on Friday, wrapping up the week on a positive note following the U.S. Federal Reserve’s decision to lower interest rates.
At 07:02 GMT, Germany’s DAX added 0.2%, France’s CAC 40 rose 0.2%, while the U.K.’s FTSE 100 slipped 0.1%.
Fed Rate Cut Fuels Positive Sentiment
The U.S. central bank’s first rate reduction of the year lifted global market sentiment, even though the move was largely anticipated, and Chair Jerome Powell signaled a cautious approach regarding future cuts.
Supporting market optimism was last week’s upbeat guidance from the European Central Bank, which raised its 2025 GDP forecast to 1.2% from 0.9% last year, citing what ECB President Christine Lagarde described as “resilience in domestic demand.”
The Bank of Spain also raised its 2025 growth projection to 2.6%, while Germany, Europe’s largest economy, is set to see a substantial GDP boost from planned public infrastructure and defense spending combined with tax reductions.
Although French political uncertainty persists, the eurozone appears to have weathered the inflation surge linked to Covid, the Russian invasion of Ukraine, and the Trump administration’s unpredictable tariff policies.
U.S. President Donald Trump’s state visit to the U.K. coincided with a series of American corporate investment announcements totaling roughly £150 billion ($204 billion). Meanwhile, British retail sales exceeded expectations, rising 0.5% in August, aided by sunny weather.
BoJ Holds Rates Steady
Friday also saw the Bank of Japan maintain its benchmark rate at 0.5%, in line with expectations, amid political uncertainty and concerns about the impact of U.S. trade tariffs. The decision was approved by a 7-2 majority on the rate-setting board, with two members advocating a 25 basis-point hike despite stable inflation. The BOJ last raised rates in January.
IG Group Expands into Cryptocurrency
On the corporate front, British online trading platform IG Group (LSE:IGG) revealed its acquisition of Australian cryptocurrency exchange Independent Reserve, broadening its digital offerings and Asia-Pacific presence. IG stated that the transaction is expected to be accretive to cash earnings per share in the first full financial year following the deal’s completion.
Oil Prices Slip but Set for Weekly Gains
Crude prices edged lower on Friday but remained on track for weekly gains following the Fed’s rate cut, despite concerns about slower U.S. demand. At 03:02 ET, Brent futures fell 0.2% to $67.30 a barrel, while U.S. West Texas Intermediate crude declined 0.3% to $63.36 a barrel. Both benchmarks are positioned to finish higher for a second consecutive week, as lower borrowing costs generally support oil demand. However, optimism has been tempered by fears of weakening U.S. consumption, highlighted by a sharp rise in distillate inventories.
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