LONDON — European stocks moved higher on Thursday as investors digest the U.S. Federal Reserve’s latest rate cut and Swiss central bank’s decision to hold rates.
The pan-European Stoxx 600 was around 0.2% higher at 12:00 p.m. in London (7 a.m. ET).
Switzerland’s central bank published its latest monetary policy decision on Thursday and left rates unchanged at 0% citing inflation coming in slightly lower than expected.
Global economic growth was stronger than expected in the third quarter, the Swiss National Bank said in a statement, nothing that “US tariffs and trade policy uncertainty weighed on the global economy, economic development in many countries has thus far remained more resilient than had been assumed.”
Setting interest rates has become a delicate balancing act for SNB policymakers, as they try to avoid implementing negative interest rates despite the country edging toward disinflation territory.
Swiss inflation fell back to 0% in November, with rising demand for the Swiss franc — widely seen as a safe haven asset — putting deflationary pressure on the export-driven economy this year.
The country is also reeling from being temporarily hit with some of the Trump administration’s highest “reciprocal” tariffs over the summer. While Switzerland made a deal with the U.S. last month to lower its tariff rate to 15%, Swiss officials warned in October that the higher rate of 39% — which came into effect in August — was placing a “heavy burden” on some of Switzerland’s key sectors.
It comes as global markets react to the Fed’s third interest rate cut of the year yesterday. The U.S. central bank trimmed the Federal Funds rate by 25 basis points to 3.5%-3.75% but signaled a tougher road ahead for further reductions.
Fed Chair Jerome Powell, at his post-meeting news conference, said the reduction puts the Fed in a comfortable position as far as rates go.
“We are well-positioned to wait and see how the economy evolves,” Powell said, noting that President Donald Trump’s tariffs had fueled inflation.
Powell is nearing the end of his second term as chair and has just three meetings left before he makes way for Trump’s nominee.
Investors also await the European Central Bank and Bank of England rate meetings, which are both scheduled for Dec. 18. European inflation is widely considered to be neutral, with the ECB’s easing cycle over.
“We don’t see the ECB cutting later this month, or even at all during in the coming year, and we don’t see [The Fed’s decision] having that kind of impact … impacting that decision,” Matthew Sherwood regional principal economist at EIU told CNBC’s “Europe Early Edition” on Thursday.
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The economist said that European growth will “pick up a little bit” but there are still “significant global headwinds” — “mostly from the U.S. trading policy.” However, there is also cause for optimism in 2026 as economies look to the “big infrastructure and defense spending boom that we’re going to get from Germany,” Sherwood said.
Indeed, defense names have been constant movers this year; the Stoxx 600 Aerospace and Defense index has gained 52% year-to-date.
Shares in German defense firm Rheinmetall were up 1.1% on Thursday, following reports of a fresh bid for Dutch competitor KNDS.
Technology stocks were down on Thursday as Oracle’s disappointing results spilled over the Atlantic. German software giant SAP shed 2.2% while Dutch chip-related name ASMI lost 0.4%. ASML was also down in early dealmaking but pared losses to gain 0.1% by midday.
Elsewhere, investors have piled into safer bets this year as uncertainly and geopolitical tensions remained high. Spot silver touched on a record high of more than $62 an ounce on Wednesday and was last seen maintaining the price. Market watchers told CNBC that they expect silver will surpass the $100 mark by the end of next year.
Asia-Pacific markets gave up earlier gains to trade mostly lower overnight, while S&P and Nasdaq futures fell Wednesday night as Oracle’s results reignited fears about high-flying tech stocks, even after the Fed’s rate cut gave a boost to U.S. equity markets in the prior session.
There are no major earnings or data releases in Europe on Thursday. Switzerland’s central bank publishes its latest monetary policy decision but the bank is expected to leave rates unchanged.
— CNBC’s Jeff Cox and Chloe Taylor contributed to this market report.