European Stocks Surge as Fed Cuts Rates by 50 Basis Points - Is a Soft Landing Ahead?
European stocks saw a nearly 1% jump on Thursday following the U.S. Federal Reserve's decision to cut rates by 50 basis points, signaling further easing to come. This move has raised hopes of a soft landing for the American economy.
The continent-wide index rose to 519.15 points, with all sectors trading higher except for telecom, which saw a 0.6% decline. The Fed's monetary-easing cycle began with a significant rate reduction, bringing the benchmark policy rate to a range of 4.75%-5.00%.
Fed Chair Jerome Powell emphasized that this action reflects policymakers' dedication to maintaining a low unemployment rate amidst easing inflation. Investors are now awaiting the Bank of England's rate decision, with Britain's benchmark also up by 0.9% ahead of the announcement.
In terms of individual stocks, Next surged by 4.4% as the British clothing retailer raised its profit outlook for the second time in two months, aiming for an annual profit of nearly 1 billion pounds ($1.3 billion). On the other hand, British online grocer Ocado Group saw a 12.6% increase after raising its forecast for 2023-2024 following a 15.5% revenue jump. However, shares of IG Group dipped by 2.7% as the company traded without entitlement to its latest dividend pay-out.
In conclusion, the Fed's rate cut and the positive performances of key European stocks indicate a potential turning point for the global economy. Investors should remain vigilant and consider adjusting their portfolios accordingly to capitalize on these market trends.