FX.co ★ European Stocks Close On Buoyant Note As Markets Cheer Fed Rate Decision

European stocks concluded Thursday on a strong note, with investors buoyed by the Federal Reserve’s decision to reduce interest rates by 50 basis points and its projection for further cuts. Meanwhile, the Bank of England (BoE) met expectations by maintaining its interest rates steady, signaling a measured approach to future monetary easing and extending its bond reduction plan for another year.

The BoE's Monetary Policy Committee (MPC), led by Andrew Bailey, voted 8-1 to keep the Bank Rate at 5%. In August, the MPC had narrowly voted 5-4 to reduce the rate by a quarter point from a 16-year high of 5.25%. Today, the MPC unanimously decided to decrease the stock of UK government bond purchases by GBP 100 billion over the next twelve months, totaling GBP 558 billion.

Energy firms and mining stocks surged on strong commodity prices, while automaker shares climbed despite a notable decline in Europe’s new car registrations in August. The pan-European Stoxx 600 closed up 1.38%, the U.K.'s FTSE 100 increased by 0.91%, Germany's DAX rose 1.55%, France's CAC 40 ended 2.29% higher, and Switzerland's SMI gained 0.63%.

Across other European markets, Austria, Belgium, Denmark, Finland, Greece, Iceland, Netherlands, Norway, Russia, Spain, Sweden, and Turkiye all saw moderate to sharp gains. Portugal ended lower, while Poland remained flat.

In the UK market, Rolls-Royce Holdings rallied nearly 6%, with Fresnillo, Antofagasta, Ashtead Group, JD Sports Fashion, and Spirax Group gaining between 4% and 4.6%. Companies such as Weir Group, Anglo American Plc, IMI, Pershing Square Holdings, Easyjet, Rio Tinto, Burberry Group, Prudential, Scottish Mortgage, Halma, Diageo, 3i Group, Sage Group, and Hikma Pharmaceuticals rose by 2.5% to 4%.

Other notable gainers included Melrose Industries, NatWest Group, BP, HSBC Holdings, Entain, Smiths Group, RightMove, and Frasers Group. Next advanced after upping its annual profit forecast, while online grocer Ocado climbed 2.7% following an upgrade to its revenue guidance.

In Germany, HeidelbergCement soared nearly 4.5%. Bayer, Adidas, Beiersdorf, SAP, BASF, Siemens Energy, Daimler Truck Holding, Brenntag, Siemens, Mercedes-Benz, Rheinmetall, MTU Aero Engines, Infineon, BMW, and Zalando also recorded gains of 2% to 4%. However, RWE, E.ON, Vonovia, and Deutsche Telekom declined sharply as Fresenius and Commerzbank also closed lower.

In France, Saint-Gobain, Hermes International, Eurofins Scientific, Safran, and Schneider Electric saw gains between 4% and 4.5%. ArcelorMittal, Airbus Group, L’Oreal, Pernod Ricard, STMicroelectronics, Dassault Systemes, Edenred, LVMH, Publicis Groupe, Accor, Kering, TotalEnergies, Thales, and Legrand also moved up significantly. Stellantis gained after denying allegations from the United Auto Workers about plans to move Dodge Durango production out of the US. However, Engie and Unibail-Rodamco both ended over 2% lower, with Orange and Bouygues also underperforming.

In economic news, the euro area's current account surplus narrowed in July due to a decline in primary income, according to the European Central Bank. The current account registered a surplus of EUR 40 billion, down from June’s EUR 51 billion surplus. The goods trade surplus fell to EUR 35 billion from EUR 39 billion, while the services surplus increased to EUR 19 billion from EUR 12 billion. New car sales plummeted 18.3% year-on-year, impacted significantly by a sharp decrease in electric car sales, as reported by the European Automobile Manufacturers' Association.