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StockBeat: European Stocks Rise in Wake of Fed's "Hawkish Cut"

By Geoffrey Smith

Investing.com -- Europe’s stock markets were mostly higher on Thursday, digesting a Federal Reserve policy meeting that suggested the U.S. central bank still isn’t too concerned about the outlook for the global economy.

By 5:15 AM ET (0915 GMT), the benchmark Stoxx 600 was up 0.4%, while the U.K. FTSE 100 and the German DAX each rose 0.3%.

Bank stocks were among the prominent gainers, reassured by the Fed’s action that the world is not yet headed for negative interest rates across the globe and “QE Infinity”.

“It’s not at all certain that there will be any more interest rate cuts this year at least,” said Carsten Mumm, a strategist with German private bank Donner&Reuschel.

Three of the top five winners in the sector were Spanish – Bankia (MC:BKIA), Banco Sabadell (MC:SABE) and Caixabank (MC:CABK), while Germany’s Commerzbank (DE:CBKG) also rose over 3%.

At the other end of the scale, mining and basic material stocks stumbled as iron ore futures fell below $90 a ton, reflecting fears that the Fed’s action still leaves key questions about the health of the Chinese economy unanswered in the light of the ongoing trade war. Rio Tinto (LON:RIO) was down 0.7% while Anglo American (LON:AAL) was down 0.4% - albeit the latter has outperformed over the last month with a gain of over 10%.

International Consolidated Airlines Group (LON:ICAG) was the best performer among the airlines as oil prices gave up over half of their gains since last weekend’s attack on Saudi Arabian oil installations. British Airways pilots said late Wednesday they had cancelled their next one-day strike in an attempt to restart talks with management over pay and conditions. The company has yet to respond publicly. The two-day strike earlier this month had caused thousands of flights to be cancelled, BA’s worst-ever day in terms of industrial relations.

U.K. retailer Next (LON:NXT), by contrast, fell over 4% after reporting a “disappointing” start to trading in the third quarter. It said it expected the fourth quarter to be stronger, helped by basis effects from a weak fourth quarter last year.

Elsewhere, German Internet incubator Rocket Internet (DE:RKET) rebounded from Wednesday’s three-month low on the back of solid second-quarter results that showed it sitting on a 3 billion euro cash pile after a string of IPOs by its portfolio companies.

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