European stocks climb after hefty Fed cut; Next soars after outlook lift

European stock markets rose strongly Thursday as investors digested the aggressive start to the Federal Reserve’s easing campaign, ahead of the Bank of England’s latest policy-setting meeting.

At 03:05 ET (07:05 GMT), the DAX index in Germany traded 0.9% higher, the CAC 40 in France rose 1.4% and the FTSE 100 in the U.K. climbed 0.9%. Fed cuts aggressively

The Federal Reserve cut interest rates by 50 basis points on Wednesday, reducing its benchmark rate to a range of 4.75% to 5%, as the central bank aggressively started a rate-cut cycle to shore up the economy following a prolonged battle against surging inflation.

Additionally, the Fed members now see a further two cuts of 25 bps in 2024, compared with a prior estimate in June for just one cut. 

The decision to cut rates, for the first time since March 2020, so assertively may raise concerns about the strength of the US economy, but Fed Chair Jerome Powell attempted to quell these worries, stating that risks of higher inflation and a weakening labor market were now balanced. BoE expected to stand pat

Attention now turns to the Bank of England , with this central bank set to make its latest policy decision later in the session.

The BoE is expected to keep its benchmark rate unchanged at 5.0%, after cutting in August, with policymakers likely to reiterate their "careful" stance against easing too fast or too soon.

UK consumer prices came in at 2.2% on an annual basis last month, close to the bank’s medium-term target, but services inflation is running hot at an annual 5.6%. Next lifts its outlook

In the corporate sector, Next (LON:NXT ) stock soared over 5% after the British retailer said it was on track to make annual profit of almost £1 billion (£1 = $1.3246) as it raised its outlook for the second time in two months after better-than-expected recent trading. Crude gains after Fed cut

Crude prices rose after a large interest rate cut from the U.S. central bank raised hopes of increased economic activity in the world’s largest consumer, but concerns over global demand lingered and capped gains.

By 03:05 ET, the Brent contract gained 0.7% to $74.19 per barrel, while U.S. crude futures (WTI) traded 0.8% higher at $70.41 per barrel.

US government data released on Wednesday showed a bigger-than-expected, 1.63 million barrel draw in inventories .

While the draw was much bigger than expectations for a draw of 0.2 mb, it was also accompanied by builds in distillates and gasoline inventories. 

 

 

 

Source: Investing.com