European stocks moved within narrow ranges on Thursday as investors digested the latest interest rate cut from the U.S. Federal Reserve. Sentiment was also weighed down by uncertainty surrounding the global artificial intelligence trade.
As of 03:05 ET (08:05 GMT), Germany’s DAX slipped 0.3%, the U.K.’s FTSE 100 edged down 0.1%, while France’s CAC 40 gained 0.1%.
Fed cuts rates but signals a higher bar for more easing
The Federal Reserve lowered interest rates by 25 basis points on Wednesday, bringing the federal funds rate to 3.5%–3.75%. While the move was widely expected, officials signaled they are likely to pause further reductions until they see clearer evidence of how inflation and the labor market are evolving.
Fed Chair Jerome Powell said the three cuts delivered this year place rates within a “range of plausible estimates of the neutral rate,” and that future changes will depend on incoming data.
The decision also revealed divisions within the Fed. Three policymakers dissented—two favored holding rates steady, while one argued for a deeper, 50-basis-point cut.
Analysts at Vital Knowledge warned that two key market drivers in 2025—global monetary easing and a unified AI momentum trade—may not extend into 2026, creating a more challenging environment for equities.
Oracle’s results pressure tech sentiment
Concerns about AI-driven spending intensified after Oracle posted weaker-than-expected earnings and revenue guidance. The firm also projected $15 billion in additional spending compared to earlier estimates, fueling fears that heavy AI investment is not yet translating into profit.
Jefferies noted that despite management’s commitment to maintaining its investment-grade credit rating, concerns about AI-related debt funding remain unresolved.
Corporate updates from Europe
European earnings were limited, but Munich Re (ETR: MUVGn) projected €64 billion in insurance revenue for 2026—above the €62 billion consensus. The reinsurer also introduced a new five-year strategic plan running through 2030.
In the U.K., Drax Group (LON: DRX) said it expects full-year 2025 earnings to land near the top end of forecasts, citing strong operational performance.
SNB expected to hold rates at zero
The European economic calendar is light, with attention turning to the Swiss National Bank’s policy meeting. The SNB is expected to keep interest rates at 0.0% despite weaker-than-expected inflation and GDP figures.
Analysts at Nomura said the threshold for returning to negative rates remains high, suggesting the SNB will maintain its current stance.
Oil retreats after tanker seizure
Oil prices slipped on Thursday, giving back some of Wednesday’s gains after the U.S. seized a sanctioned tanker off the coast of Venezuela. The move raised concerns about potential supply disruptions.
Brent crude fell 0.7% to $61.78 a barrel, while West Texas Intermediate crude also dropped 0.7% to $58.05 a barrel.
Prices had climbed the previous day as the tanker seizure highlighted risks to Venezuelan supply and added a risk premium to the market.
Investors are also watching Ukraine peace negotiations and the Fed’s rate path, as lower interest rates typically support economic growth and energy demand.
