(Bloomberg) -- European stocks rose to within striking distance of their record highs, tracking a global rally across financial markets after the Federal Reserve announced a half-percentage-point interest-rate cut, a bigger move than many economists had forecast.
The Stoxx Europe 600 Index gained 1.4% to 521.67 points at the close in London, just short of the 525.05 points peak in August. Britain’s FTSE 100 pared some gains but was up about 0.9% after the Bank of England, in contrast to the Fed, held interest rates steady and said it would not rush to bring them lower.
Sectors tied to economic momentum, such as miners, autos, and technology, outperformed, while typically defensive stocks, like utilities and telecoms, fell.
Among individual stocks, shares in Davide Campari-Milano NV posted their biggest jump since 2020 when its controlling shareholder Lagfin said it would buy up to €100 million of shares in a boost for the Italian spirits maker after its chief executive officer abruptly quit.
European shares have bounced back over 7% since a selloff in August, when US recession fears jolted the market. However, signs of an economic slowdown across the continent are fueling concerns the European Central Bank could find itself behind the curve on its monetary easing cycle.
“There’s always a risk of a policy mistake but we will only know about that later on,” said Raphael Thuin, head of capital markets strategies at Tikehau Capital. “Overall, the positive backdrop which has lifted European stocks back to their record high levels is still present.”
European gains come as US stocks reached yet another record high. Expectations have grown that the Fed will be able guide the US economy toward a soft landing, though Fed Chair Jerome Powell cautioned against assuming that big rate cuts would continue.
Steven Bell, chief economist for EMEA at Columbia Threadneedle, said lower rates were a positive for both the economy and the financial industry.
“We can’t see a catalyst that would cause a fall, so for the moment we’re enjoying the ride,” he said.
For more on equity markets:
- Rate Cuts Can Only Make UK Shares More Attractive: Taking Stock
- M&A Watch Europe: Advent Nears Idemia Biometric Unit Sale; EQT
- Spain Could See More Than 20 IPOs This Year, Says SIX: ECM Watch
- US Stock Futures Rise as Focus Shifts to Boost From Rate Cuts
- Inflation Right on Cue: The London Rush
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