European Stocks Rise on Thursday

European stocks moved higher on Thursday, with both the STOXX 50 and STOXX 600 gaining 0.7%, tracking a broader global rally after the Fed raised interest rates by 25bps, as expected, and signalled at least one further hike this year. Chair Warsh also reaffirmed the central bank’s commitment to tackling inflation, helping to restore investor confidence in its policy stance. Bond yields retreated and oil prices edged lower, providing additional relief to market sentiment. Meanwhile, US President Trump threatened to impose tariffs on the EU, or potentially halt trade with the bloc altogether, if it proceeds with its plan to make Canada its first-ever “associate member”. The auto sector was among the top performers, led by Stellantis (+2.5%), Renault (+2.1%) and BMW (1.9%), while tech stocks also advanced, with ASML gaining 2%. Sodexo surged nearly 4% after JPMorgan upgraded the stock to “overweight” from “neutral”.

European equity markets were set for a higher open on Thursday after the US Federal Reserve delivered a widely anticipated interest rate hike, although the central bank signaled that further tightening may be needed to contain inflation. Stocks also gained support from lower oil prices, which eased concerns over inflation, following reports that Saudi Arabia aims to restore around half of its East-West pipeline capacity within days and return the system to full operation within six weeks. Meanwhile, investors awaited the Bank of England’s policy decision, with rates widely expected to remain unchanged, though policymakers could signal a potential move later this year amid rising energy costs. Final Eurozone inflation figures for August will also draw attention, while no major corporate earnings are scheduled for release in Europe today. In premarket trading, Euro Stoxx 50 and Stoxx 600 futures were both up around 0.2%.

European stocks closed higher on Wednesday, halting sharp losses from the week amid a pause on the recent rallies in energy prices and sovereign yields. The Euro STOXX rose 0.5% to 6,267 and the STOXX Europe 600 rose 0.5% to 637. Inflationary risks in the Euro Area remained rampant and the elevated levels for sovereign yields continued to dampen credit conditions, but the pause in the slump for bonds allowed equities to enjoy some respite. Allianz, BNP Paribas, and AXA added over 1% to support the financial sector while ASML and Infineon advanced 1.3% on a strong session for AI infrastructure stocks. The Federal Reserve was due to hike its rates by 25bps after the closing bell, and a fragmented FOMC is expected to pencil a wide range of projections for the US economy in their SEP.