European markets open higher as traders assess Fed interest rate cut

LONDON — European stocks opened higher on Thursday, as traders evaluated the U.S. Federal Reserve’s rate cut on Wednesday.

The pan-European Stoxx 600^[1] was 0.5% higher by 8:18 a.m. in London (3:18 a.m. ET), with most sectors and all major regional bourses in positive territory.

Global markets are assessing the Fed’s decision to cut its benchmark overnight lending rate by 25 basis points on Wednesday.

In an 11-to-1 vote signaling less dissent than Wall Street had anticipated, the Federal Open Market Committee’s decision put the overnight funds rate in a range between 4.00%-4.25%

During a press conference^[2] following the decision, Fed Chair Jerome Powell put a damper^[3] on investor hopes that the central bank would be on a lengthy rate-cutting path this year, as he called the latest cut “risk management.”

Policymakers are predicting two more reductions this year, but just one in 2026^[4], while traders had priced in two to three more trims next year.

European banking stocks rose in the wake of the Fed’s update, with the Euro Stoxx Banks index gaining 0.9% in early trading. Santander^[5], Deutsche Bank^[6] and Monte dei Paschi^[7] all added around 2%.

Also among the stocks pulling the Stoxx 600 higher was Novo Nordisk^[8], which gained 2.6%. In a recent update, the Danish pharmaceutical giant said^[9] that trials had shown its Wegovy obesity pill had led to “significant” weight loss in participants.

Asia-Pacific markets^[10] traded mixed overnight. Japan’s benchmark Nikkei 225 rose 1.13% to a fresh record Thursday, led by gains in the real estate and technology sectors.

In Europe, the Bank of England is due to announce its latest interest rate decision on Thursday. The central bank is expected to keep rates on hold, at 4%.

— CNBC’s Jeff cox contributed to this market report.