LONDON – European stock markets opened slightly lower on Thursday as investors digested the U.S. Federal Reserve’s latest rate cut and the Swiss central bank’s decision to keep interest rates on hold.
pan-european Stocks 600 Shares were down about 0.1% as of 8:27 a.m. ET in London.
The Swiss central bank announced its latest monetary policy decision on Thursday, leaving interest rates unchanged at 0%, citing slightly lower than expected inflation.
The Swiss National Bank said in a statement that global economic growth in the third quarter was better than expected, but it did not say anything: “While U.S. tariffs and trade policy uncertainty weighed on the global economy, economic development in many countries has so far remained more resilient than expected.”
This comes as global markets react to yesterday’s Fed’s third interest rate cut of the year. The U.S. central bank cut the federal funds rate by 25 basis points to 3.5% to 3.75%, but signaled a difficult road ahead for further cuts.
Fed Chairman Jerome Powell said in a press conference after the board meeting that the latest rate cut puts the Fed in a comfortable position on interest rates.
“We’re in a wait-and-see position to see how the economy develops,” Powell said, noting that President Donald Trump’s tariffs have accelerated inflation.
Mr. Powell is nearing the end of his second term as chairman, with three meetings remaining before he makes way for Mr. Trump’s nominee.
Investors are also awaiting the European Central Bank and Bank of England interest rate meeting scheduled for December 18th. The ECB’s easing cycle has ended and European inflation is widely considered to be neutral.
“We don’t expect the ECB to cut rates later this month or even next year, and we don’t think[the Fed’s decision]will have that kind of impact…on that decision,” EIU regional chief economist Matthew Sherwood told CNBC’s “Europe Early Edition” on Thursday.
The economist said European growth would “pick up a bit” but there were still “significant global headwinds”, “largely driven by US trade policy”. But there is also reason for optimism in 2026, Sherwood said, as the economy looks forward to the “massive infrastructure and defense spending boom we’re going to get from Germany.”
In fact, the names of the defensive linemen have been in constant focus this year. The Stoxx 600 Aerospace & Defense Index is up 52% year-to-date.
German defense company shares line metal Shares rose 1.3% on Thursday following reports of a new bid for rival KNDS NV.
S&P and Nasdaq futures fell on Wednesday night as Oracle’s results reignited concerns about soaring tech stocks, even as the Federal Reserve interest rate cut boosted U.S. stock markets in early trading, while Asia-Pacific markets gave up previous gains and traded mostly lower overnight.
There are no major earnings or data releases in Europe on Thursday. The Swiss central bank will announce its latest monetary policy decision, with the bank expected to keep interest rates on hold.
—CNBC’s Jeff Cox contributed to this market report.
