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Investing.com - European stocks traded higher Thursday as investors digested the rate cut by the U.S. Federal Reserve, ahead of a policy-setting meeting by the Bank of England.
The DAX index in Germany gained 1.3%, the CAC 40 in France climbed 0.9% and the FTSE 100 in the U.K. rose 0.2%.
Fed decision boosts risk appetite
European equities have followed the positive tone seen in Asia, with the Nikkei 225 in Japan jumping to a fresh record peak, after the U.S. central bank reduced interest rates overnight and signaled further cuts ahead.
The Fed on Wednesday cut its benchmark rate by 25 basis points to a range of 4.00–4.25%, its first reduction since December, with newly-appointed Governor Stephen Miran dissenting in favor of a larger 50 bps cut.
Policymakers projected two further cuts before year-end in response to mounting labor market concerns.
At the same time, Fed Chair Jerome Powell highlighted "a challenging situation" for policymakers, noting that risks to inflation were tilted to the upside and risks to employment to the downside.
Bank of England holds rates steady
The Fed decision set the scene for Bank of England policymakers to meet today, ahead of the Bank of Japan on Friday.
The Bank of England held its interest rates unchanged at its policy-setting meeting, as widely expected, and continued to signal a cautious and gradual easing approach even as inflation remained elevated.
The U.K. central bank maintained its Bank Rate at 4%, after cutting from 4.25% in August, its fifth reduction in 12 months.
Data published on Wednesday showed inflation in August held at 3.8%, the highest in 19 months and almost double the BoE’s 2% target, likely prompting BoE policymakers to vote to keep rates on hold this month as they wait for signs that underlying inflation pressures from the labor market are definitely fading.
The Bank of Japan is also expected to hold interest rates unchanged on Friday amid heightened political uncertainty.
Next’s H1 profit lifted by international sales
In the corporate sector, U.K. clothing retailer Next (LON:NXT) reported a hefty rise in first-half profit, lifted by strong online and international sales that offset weaker performance in retail stores.
Engineering company Renishaw (LON:RSW) delivered record revenue and stronger adjusted profit despite weak demand in some product areas, with a cautious but steady outlook for the new fiscal year.
Additionally, confectionary giant Mars said it will invest €1 billion euros ($1.18 billion) in its European Union operations by the end of 2026 to boost manufacturing, sustainability and innovation pipeline in the region.
Crude falls after Fed cut
Oil prices fell Thursday, losing steam after rising to two-week highs as traders digested the interest rate cut from the Federal Reserve amid signs of slowing U.S. economic growth.
At 12:05 ET, Brent futures dropped 0.7% to $67.47 a barrel, and U.S. West Texas Intermediate crude futures fell 0.6% to $63.65 a barrel.
Persistent oversupply and soft fuel demand in the U.S., the world’s biggest oil consumer, also weighed on the market.
U.S. crude oil stockpiles fell sharply last week as net imports dropped to a record low while exports jumped to a near two-year high, data from the Energy Information Administration showed on Wednesday.