European markets end higher as investors cheer Fed cut; SNB holds rate

EUROPEAN shares closed higher on Thursday after a series of lukewarm sessions, as investors welcomed the US Federal Reserve’s overnight interest rate cut and assessed a policy decision from the Swiss National Bank.

The pan-European Stoxx 600 ended 0.55 per cent higher at 581.34 points, after a muted start to the session amid renewed worries about lofty tech valuations following cloud computing giant Oracle’s hefty AI spending plans.

Major regional bourses were broadly higher, with France’s CAC 40 up 0.8 per cent and London’s FTSE 100 up 0.5 per cent.

In the Stoxx 600, at least 19 sectors were in the green, with optimism stemming from the Fed’s meeting, where it cut rates by 25 basis points. However, the central bank cautioned against further reductions in the near term until there is more clarity on the labour market.

“So, in a way, the message was a bit hawkish,” said Bas van Geffen, quantitative analyst at Rabobank, adding that despite the Fed’s projection of one more cut in 2026, “we think the Fed will, in reality, cut more.”

Investors also see a higher likelihood that White House economic adviser Kevin Hassett will become the next Fed chair, a scenario that could lead to more rate cuts next year.

Separately, the Swiss National Bank left its policy rate unchanged at 0 per cent and said a recent agreement to reduce US tariffs on Swiss goods had improved the economic outlook, even as inflation has somewhat undershot expectations.

The country’s local currency franc strengthened 0.25 per cent against the euro.

Meanwhile, the region-wide banking index gained 1.7 per cent. Exane BNP Paribas backed lenders such as Unicredit and ING, saying they are set to generate an average Return on Tangible Equity (ROTE) of more than 16 per cent in 2027.

Unicredit was up 2.4 per cent and ING added 2.2 per cent. BBVA rose 2.3 per cent after completing the buyback programme.

Concerns also emerged for the sector after the European Central Bank proposed to simplify bank regulation, but failed to address easing the overall financial burdens on lenders.

Indexes focused on construction and travel jumped about 1.8 per cent each.

The broader luxury index rose 0.6 per cent, following three straight days of losses. Utilities stocks lost 0.45 per cent, dragged by a 6.4 per cent slide in Naturgy after BlackRock sold a 7.1 per cent stake in the Spanish gas utility for around 1.7 billion euros. European aerospace and defence index lost 0.8 per cent, staying sensitive to developments around the Russia-Ukraine conflict.

Among other movers, Delivery Hero fell 5.3 per cent after Citigroup downgraded the stock to “sell” from “neutral” after a near 14 per cent surge on Wednesday.

Schneider Electric rose 2.7 per cent after planning a share repurchase programme of up to 3.5 billion euros (S$5.3 billion) through 2030, its first in nearly three years, and aims to increase its adjusted core profit margin in the same period.

RS Group jumped 6.6 per cent to become the top individual gainer on the Stoxx 600 after JPMorgan upgraded the industrial and electronic components provider to “overweight” from “neutral”.

Fragrance maker Givaudan fell 7.7 per cent, with traders citing disappointing comments on sales guidance during an analyst call ahead of next month’s full-year results. REUTERS