European equities traded higher on Thursday as investors reacted to the U.S. Federal Reserve’s interest rate cut, with attention turning to an upcoming policy meeting by the Bank of England. At 07:05 GMT, Germany’s DAX index rose 0.9%, France’s CAC 40 climbed 0.6%, and the U.K.’s FTSE 100 edged down 0.1%.
Fed Decision Boosts Risk Appetite
European markets followed the positive momentum seen in Asia, where Japan’s Nikkei 225 reached a new record high after the U.S. central bank reduced its benchmark rate overnight and signaled the possibility of additional cuts. On Wednesday, the Fed lowered its benchmark rate by 25 basis points to a range of 4.00–4.25%, marking its first reduction since December. Newly appointed Governor Stephen Miran dissented, advocating a larger 50-basis-point cut.
Federal policymakers projected two further reductions before year-end in response to mounting labor market concerns. Fed Chair Jerome Powell described the situation as “a challenging situation” for policymakers, highlighting that risks to inflation remain skewed to the upside, while risks to employment are tilted to the downside.
Bank of England Set to Meet
The Fed’s move sets the stage for the Bank of England, which is expected to keep rates on hold at 4% following last month’s cut—the fifth reduction since August 2024. Data released on Wednesday indicated that August inflation remained at 3.8%, the highest level in 19 months and nearly double the BoE’s 2% target. This is likely to prompt BoE policymakers to maintain rates while monitoring underlying inflation pressures from the labor market. The Bank of Japan is also expected to hold rates steady on Friday amid heightened political uncertainty.
Corporate Highlights
In corporate news, U.K. retailer Next (LSE:NXT) reported a significant rise in first-half profit, driven by strong online and international sales that offset weaker store performance. Engineering firm Renishaw (LSE:RSW) delivered record revenue and stronger adjusted profits despite soft demand in certain segments, maintaining a cautious but stable outlook for the new fiscal year. Confectionery giant Mars announced plans to invest €1 billion ($1.18 billion) in its EU operations by the end of 2026, targeting manufacturing, sustainability, and innovation initiatives.
Oil Markets React
Crude prices softened on Thursday after earlier gains to two-week highs, as traders assessed the Fed’s rate cut amid indications of slowing U.S. economic growth. At 03:05 ET, Brent futures fell 0.3% to $67.77 per barrel, while U.S. West Texas Intermediate crude dropped 0.3% to $63.85 per barrel. Persistent oversupply and weak fuel demand in the U.S., the world’s largest oil consumer, added pressure. Data from the Energy Information Administration showed that U.S. crude stockpiles fell sharply last week as net imports dropped to a record low, while exports rose to a near two-year high.
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