European stocks moved higher on Thursday as investors absorbed the latest U.S. Federal Reserve rate cut and its accompanying comments. The market reaction also reflected growing uncertainty around the powerful artificial intelligence trade that has driven sentiment in recent years.
Germany’s DAX rose 0.6%, the U.K.’s FTSE 100 added 0.5%, and France’s CAC 40 gained 0.8%.
Fed Cuts Rates but Signals Caution Ahead
The Federal Reserve lowered interest rates by 25 basis points to a range of 3.5% to 3.75%. The move was widely expected. However, the central bank indicated that further cuts may not come soon. Policymakers want more clarity on the direction of the labor market and inflation before easing again.
At the press conference, Chair Jerome Powell said this year’s three cuts have moved rates into a “range of plausible estimates of the neutral rate.” He added that future adjustments will depend on economic data.
The decision revealed deeper divisions within the Fed. Three officials dissented — two preferred no cut, while one argued for a larger 50-basis-point reduction.
According to analysts at Vital Knowledge, the supportive forces that boosted markets in 2025 — global monetary easing and strong AI momentum — may not be present in 2026. This could create a more challenging environment for equities.
Oracle Results Pressure Sentiment
Signals of AI-related uncertainty intensified after Oracle reported weaker-than-expected profit and revenue guidance. The company also revealed it plans to increase spending by $15 billion, suggesting heavy investment in AI cloud capacity is not translating into profit as quickly as expected.
Jefferies analysts noted that concerns over how Oracle will fund this expansion remain unresolved, even with management’s commitment to maintaining an investment-grade credit rating.
In Europe, corporate news was more positive. Munich Re projected €64 billion in insurance revenue for 2026, beating expectations and pointing to a stronger growth outlook. The company also introduced a new five-year strategic plan running through 2030.
Drax Group said its full-year 2025 earnings should come in at the top end of forecasts, supported by strong performance across its operations.
SNB Expected to Hold Rates at Zero
Economic data in Europe was limited on Thursday, but markets focused on the Swiss National Bank’s policy meeting. The SNB is expected to keep interest rates at 0.0%, despite recent inflation and GDP readings coming in weaker than projected.
Nomura analysts said the threshold for a negative policy rate remains high, suggesting the central bank may leave rates unchanged for an extended period.
Oil Prices Fall After Tanker Seizure
Oil prices slipped on Thursday, giving back part of Wednesday’s rally. The decline came after the U.S. seized a sanctioned tanker off Venezuela’s coast, raising concerns about possible supply disruptions.
Brent crude fell 2% to $60.99 a barrel, while West Texas Intermediate dropped 2% to $57.29.
Prices had previously climbed on news of the tanker seizure, which highlighted the risk of disruptions to Venezuelan exports and added a supply-risk premium to the market.
Traders also continue to monitor Ukraine peace developments and the Fed’s policy stance. Lower interest rates can stimulate economic activity and increase oil demand over time.
