Market: Europe Ends Higher, Optimistic After the Fed

Paris (Reuters) – European stock markets closed higher on Thursday, with investors responding positively to the Federal Reserve’s latest monetary policy decision.**

In Paris, the CAC 40 rose by 2.29% to 7,615.41 points, the German Dax gained 1.54%, and the British FTSE increased by 0.91%.

The EuroStoxx 50 index ended up 2.16%, the FTSEurofirst 300 climbed 1.39%, and the Stoxx 600 advanced 1.36%.

Markets reacted favorably to the latest U.S. economic indicators released after the Fed’s decision, which aligned with the central bank’s economic outlook. The Fed had emphasized the robustness of the U.S. economy and the need to lower interest rates to sustain this strength.

New unemployment claims for the week ending September 14 were lower than expected, and the “Philly Fed” sentiment indicator surprised on the upside. This led markets to believe that the central bank might not be as behind the curve as its 50 basis point rate cut suggested.

Kit Juckes, chief forex strategist at Société Générale CIB, noted, “The Fed cut rates by 50 basis points but highlighted that the economy is performing well and avoided a downward revision of the terminal rate expected by the markets,” calling it a “50 bp cut that seemed restrictive.”

Markets are also processing the Bank of England’s recent decision to keep rates unchanged. Luke Bartholomew, senior economist at abrdn, observed, “The Bank’s relative caution contrasts with the Fed’s aggressive easing cycle, which cut rates by 50 basis points. This policy divergence reflects not only the different mandates of the two central banks but also their distinct growth and inflation outlooks.”

Investors are also looking ahead to the Bank of Japan’s meeting on Friday, especially if the institution, known for surprising observers, adjusts its monetary policy.

**ON WALL STREET**

Wall Street saw a significant surge mid-session, with the S&P 500 hitting a record high following the Fed’s latest decision, which increased the likelihood of a “soft landing” for the U.S. economy.

At Europe’s close, New York Stock Exchange trading showed a 0.99% rise for the Dow Jones, a 1.6% increase for the S&P 500, and a 2.75% gain for the Nasdaq Composite.

**STOCKS**

Markets have factored in a smooth economic landing in the U.S., which benefits global activity and growth stocks. The technology and basic resources sectors, sensitive to economic performance, ended up 3.4% and 3.2%, respectively, marking the best performances in the Stoxx 600. Meanwhile, the utilities sector closed down 1.8%, lagging behind.

Campari’s shares rose 9.5% after its largest shareholder announced plans to buy up to 100 million euros worth of additional shares.

This strong performance also supported other wine and spirits companies, with Pernod Ricard and Rémy Cointreau gaining 3.41% and 3.44%, respectively.

Air France-KLM gained 3.4% after Exane BNP Paribas upgraded its recommendation on the company to “neutral.”

MFE-MediaForEurope, the broadcaster controlled by the Berlusconi family, reported that its advertising revenues are expected to exceed forecasts for the first nine months of the year, leading to a 15.2% increase in its stock price.

**INTEREST RATES**

Short-term yields, which are more sensitive to monetary policy, fell following the Fed’s latest decision.

At Europe’s close, the 10-year Treasury yield increased by 5.3 basis points to 3.7396%, while the 2-year yield remained steady at 3.6065%.

The German 10-year yield ended stable at 2.193%, and the 2-year yield decreased by 4.8 basis points to 2.216%.

**CURRENCIES**

The dollar strengthened following positive economic indicators released on Thursday, raising hopes for continued strength in the U.S. economy. However, the pound gained against the dollar after the Bank of England’s decision.

The dollar rose 0.26% against a basket of major currencies, the euro increased 0.2% to 1.114 dollars, and the pound sterling strengthened 0.39% to 1.3264 dollars.

**OIL**

The Fed’s rate cut supported oil prices as traders anticipated sustained high demand in the U.S.

The dollar gained 0.19% against a basket of major currencies, the euro rose 0.24% to 1.1145 dollars, and the pound sterling strengthened 0.45% to 1.3272 dollars.

**TO FOLLOW ON FRIDAY:**

(Written by Corentin Chappron, edit

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