European Stocks Climb as Traders React to U.S. Fed Rate Cut and Await Bank of England Decision

European shares opened higher on Thursday morning as investors digested the U.S. Federal Reserve’s latest interest rate cut and braced for a fresh policy update from the Bank of England. The pan-European Stoxx 600 index rose 0.5% by 8:18 a.m. in London, with gains spread across most sectors and all major regional bourses in positive territory.

Markets worldwide are still weighing the implications of the Fed’s move on Wednesday to trim its benchmark lending rate by 25 basis points. The decision, backed by an 11-to-1 vote that signaled less internal disagreement than Wall Street had expected, lowered the overnight funds rate to a range of 4.00%-4.25%. Investors had largely anticipated the cut but were looking for clearer signs of a longer easing cycle.

During a post-decision press conference, Federal Reserve Chair Jerome Powell cooled expectations for an aggressive series of rate reductions, calling the move “risk management” rather than the start of a broad pivot. U.S. policymakers forecast two more cuts this year but only one in 2026, diverging from market bets of two to three reductions next year. That guidance left traders recalibrating their strategies and shifted attention back to Europe’s own monetary policy outlook.

Financial stocks were among the biggest winners in early European trading. The Euro Stoxx Banks index advanced 0.9%, with major lenders Santander, Deutsche Bank and Monte dei Paschi all up around 2%. Danish drugmaker Novo Nordisk also helped lift the Stoxx 600, jumping 2.6% after reporting that trials of its Wegovy obesity pill delivered “significant” weight loss in participants—news that bolstered sentiment in the healthcare sector.

Asian markets offered a mixed lead overnight, with Japan’s Nikkei 225 climbing 1.13% to a fresh record high on the back of gains in real estate and technology stocks. Meanwhile, European investors are watching the Bank of England, which is expected to keep its key interest rate unchanged at 4% in a policy decision due later Thursday. The outcome could set the tone for sterling and U.K. financial markets in the days ahead.

source: cnbc