European stocks surge as investors react to Fed and BoE decision

By:
on Nov 2, 2023
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  • European markets soar after Fed holds rates.
  • Bank of England follows suit, maintains rates.
  • Robust corporate earnings boost market sentiment.

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European stock markets witnessed a substantial upswing on Thursday as investors responded favourably to the US Federal Reserve’s decision to maintain steady interest rates. The market rally also comes right on the heels of a Bank of England (BoE) decision confirming the stability of interest rates.

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Corporate earnings, including impressive reports from Lufthansa, further contributed to the positive sentiment.

Fed’s Decision and BoE decision

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European stock markets experienced a notable surge in value, with the Stoxx 600 index rising by 1.5% in London by midday.

This bullish sentiment was primarily triggered by the US Federal Reserve’s recent decision to keep interest rates unchanged. All sectors of the market were in positive territory, particularly tech stocks, which surged by 3.7%, and mining stocks, which saw a 2% increase in their value.

Among the key European indices, the FTSE 100 in London rose by 1.16%, the DAX in Germany increased by 1.6%, the CAC 40 Index in France recorded a 1.92% gain, the FTSE MIB in Italy climbed by 1.81%, and the IBEX 35 Index in Spain was up by 1.76%.

The Bank of England’s announcement of maintaining interest rates came as no surprise and added weight to the market’s sustained gains. The bank’s decision followed similar moves by the Federal Reserve and the European Central Bank to pause interest rate hikes.

Corporate earnings fuel market optimism

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Corporate earnings reports played a pivotal role in driving share prices across European markets.

Companies such as Novo Nordisk and Shell reported their earnings before the market opened, with Adecco leading the pack. Adecco shares surged by an impressive 12% as the Switzerland-based recruitment firm surpassed third-quarter estimates with a smaller-than-expected decline in earnings.

Other notable performers included Derwent London, Kojamo, Grifols, Lufthansa, and BT, all reporting robust earnings.

Deutsche Lufthansa AG (ETR:LHA), in particular, experienced a remarkable 7.9% increase in share price following its third-quarter earnings report that exceeded analyst expectations. The airline attributed its positive results to strong summer demand, higher capacity, and consistent high yields.

Lufthansa announced that these results marked its second-best quarterly performance in the company’s history, with a total operating profit of 1.5 billion euros ($1.59 billion). The airline also maintained a positive outlook for the remainder of the year, anticipating that the demand for air travel will remain high.

This positive sentiment evident in the performance of various key indices and individual stocks emphasizes the importance of central bank decisions and corporate earnings in shaping market dynamics.

Bank of England CAC 40 Index DAX Performance Index European Central Bank Federal Reserve System FTSE 100 Index FTSE MIB Index IBEX 35 Index Shell Stoxx 600 Index UK Airline Central Banks Earnings Reports Economic Europe Indices Interest Rate Stock Market World