Bank of England in the City of London as economists and mortgage holders await this week’s interest rate announcement on 28th July 2024 in London, United Kingdom.
LONDON — European markets were higher Thursday as investors digested the U.S. Federal Reserve's first interest rate cut in four years and looked ahead to the Bank of England's rate decision later in the session.
The pan-European Stoxx 600 index was up 0.89% by 9:30 a.m. London time, with all major bourses and virtually all sectors in the green. Mining stocks added 2.8% while utilities were a rare outlier, down 0.84%.
Retail stocks climbed 1.7%, led by gains for British retailer Next. The company jumped as much as 5.8% before paring gains slightly, after saying it was on track to make almost £1 billion ($1.32 billion) in annual profits following an uptick in first-half sales.
Shares of Commerzbank traded 1.5% lower in morning deals as further developments emerged after UniCredit obtained a 9% stake in the German lender last week. UniCredit CEO Andrea Orcel said the Italian bank was able to buy 4.5% of the state's stake in Commerzbank because the government trusts it, Reuters reported Thursday citing local media. UniCredit shares were mostly unchanged.
Get top local stories in Philly delivered to you every morning. Sign up for NBC Philadelphia's News Headlines newsletter.
U.S. stocks initially jumped after the Fed announced a jumbo 50 basis point cut to interest rates, bringing its target range to 4.75% to 5.00%. However, markets ultimately closed lower amid concerns of a potential economic downturn. U.S. futures were seen lower overnight.
Trading in Asia-Pacific Thursday was choppy following the announcement, but stocks ultimately rose during Thursday's session.
Back in Europe, investor attention is now turning to the Bank of England, with the central bank largely expected to hold rates steady at 5%. The Fed's jumbo rate cut is unlikely to impact the Bank of England, according to economists, as the central bank ratified its decision around lunchtime Wednesday, hours before the U.S. announcement.
Money Report
"The U.K. is looking very much at its own economy. The fact that the U.S. has now moved ahead with a 50 basis points rate cut, with more cuts to come, I don't think is really going to impact the Bank of England's point of view," Tiina Lee, CEO at Citi UK, told CNBC's "Squawk Box Europe" on Thursday.
Additionally, inflation in the U.K.'s closely watched services sector remains stubbornly higher, fresh data showed Wednesday, likely prompting caution from policymakers.
Also on Thursday, Norway's central bank kept interest rates on hold at a 16-year high of 4.5% and said it plans to start cutting borrowing costs from the start of next year.
