A television station broadcasts the Federal Reserve’s interest-rate cut on the floor of the New York Stock Exchange (NYSE) in New York, US, on Wednesday, Dec. 18, 2024.
This was CNBC's live blog covering European markets.
European markets fell sharply on Thursday after the U.S. Federal Reserve indicated that fewer rates cuts are on the horizon.
The pan-European Stoxx 600 index closed 1.51% lower, notching its worst session since Nov. 12, with all sectors and major bourses in negative territory.
The move lower followed a Wall Street sell-off on Wednesday. The Fed cut its overnight borrowing rate by 25 basis points to a target range of 4.25% to 4.5% and signaled there will likely only be two rate cuts in 2025, rather than the four cuts indicated in its previous forecast.
"We moved pretty quickly to get to here, and I think going forward obviously we're moving slower," Fed Chair Jerome Powell said at the post-meeting press conference.
The comments prompted panic on Wall Street, with U.S. stocks plunging as bull market sentiment was dealt a blow. Overnight, Asia-Pacific markets and currencies also fell.
While sentiment remained downbeat in Europe, U.S. markets opened higher on Thursday, with the Dow Jones Industrial Average rebounding 0.9%.
Money Report
The Bank of England left rates unchanged at 4.75% at its December meeting after U.K. inflation rose to an eight-month high in November. The central bank's decision was in line with expectations, though traders were surprised by the fact that three policymakers voted for a rate cut while six voted for a hold, a move dovish mix than forecast.
In other central bank news, Sweden's Riksbank announced a 25-basis-point rate cut Thursday, and Norway's central bank left its own policy rate unchanged, but suggested it could begin reducing rates in March of 2025.
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— CNBC's Jeff Cox contributed to this market report
Europe stocks close lower
European stock markets closed in the red on Thursday, with the Stoxx 600 index finishing 1.52% lower as investors assessed December's monetary announcements from the U.S. Federal Reserve, Bank of England and European Central Bank.
Financial services stocks closed 2.1% lower as rate-sensitive technology stocks dropped 2.43%.
— Jenni Reid
Bank of England likely to cut interest rates three more times in 2025, economist says
James Sproule, chief U.K. economist at Handelsbanken, comments on the Bank of England's decision to hold interest rates in December and on the path ahead in 2025.
U.S. stocks open higher
The Dow Jones Industrial Average opened higher on Thursday, rebounding from its 10th straight loss.
The 30-stock Dow added 387 points, or 0.9%. The S&P 500 gained 1%, while the Nasdaq Composite climbed 1.1%.
— Brian Evans, Pia Singh
Higher-for-longer rates could be 'new reality' for the UK, strategist says
Interest rates in the U.K. could remain elevated for longer, Hussain Mehdi, director for investment strategy at HSBC Asset Management, commented on Thursday after the Bank of England said it was keeping rates unchanged for now.
"Markets seem to be expecting little further easing from the BoE with just two 25bp cuts priced in for 2025. While we think risks are tilted towards more rate reductions amid signs of weakening demand for labour, the reality is inflation is proving stubborn and persistent," he explained.
Figures released earlier this week showed that inflation rose to 2.6% in November, reflecting the second consecutive monthly increase.
Now, the U.K. economy could face a "new reality of higher-for-longer rates and a terminal interest rate that might not drop much below 4%," Mehdi said.
So far the BOE has implemented two quarter-point cuts this year, taking its key rate from 5.25% to 4.75%.
— Sophie Kiderlin
Bank of England holds interest rates at 4.75% after inflation uptick
The Bank of England on Thursday ended its last meeting of the year with a decision to leave interest rates unchanged, after U.K. inflation rose to an eight-month high.
Economists had widely expected a rate hold at the December meeting, as policymakers remain concerned with stubborn services inflation and wage growth.
The BOE has already taken its key rate from 5.25% to 4.75% this year in two quarter-percentage-point moves.
— Jenni Reid
Movers: Serco Group, Canal+
Shares in British public services provider Serco Group were up around 6.77% by 11:31 a.m. London time on Thursday after issuing a trading update. The company said it was expecting revenue of around £4.8 billion ($6.1 billion) in 2024, while underlying operating profit is projected to come in at around £270 million.
Meanwhile, French broadcaster Canal+ shares fell 10.39%. The company made its London stock market debut on Monday after media holding company Vivendi's shareholders last week agreed to spin off Canal+, and shares have been volatile ever since.
— Sophie Kiderlin
Putin admits Russian inflation is an ‘alarming signal’ and the economy is ‘overheating’
Russian President Vladimir Putin on Thursday said that inflation is a problem facing Russia, and that the country's economy is overheating.
"There are some issues here, namely inflation, a certain overheating of the economy, and the government and the central bank are already tasked with bringing the tempo down," Putin said in his annual "Direct Line" Q&A session with Russian citizens on Thursday, in comments translated by Reuters.
Norway's central bank leaves policy rate unchanged, but hints at March rate cut
Norway's central bank on Thursday said it would leave its policy rate unchanged at 4.5%, where it has stayed since December 2023.
Markets had been pricing in an around 71% chance of rates holding steady ahead of the decision, according to LSEG data.
The central bank nevertheless said that, based on assessments over the outlook from its Monetary Policy and Financial Stability Committee, the policy rate would likely be lowered in March 2025.
"The Committee judges that a restrictive monetary policy is still needed to stabilise inflation around target, but that the time to begin easing monetary policy is soon approaching," Norges Bank Governor Ida Wolden Bache said in a statement.
Norway's consumer price index came in at 2.4% in November, the country's statistics office said earlier this month.
Inflation has moved closer to the target range and inflationary pressures seemed to be "more subdued" than expected, while economic activity appeared to be "holding up better than previously projected," the central bank noted.
— Sophie Kiderlin
Sweden's Riksbank cuts interest rates by a quarter point
Sweden's Riksbank on Thursday cut interest rates by a quarter point, bringing its policy rate to 2.5%.
Market expectations were split about whether the central bank would cut rates or hold them steady ahead of the announcement, LSEG data showed.
While inflation fell throughout 2024 and inflationary pressures have stabilized, "growth has been weak" and policymakers opted to cut rates further to support economic recovery, the Riksbank said in a statement.
Sweden's consumer price index came in at 1.6% in November on an annual basis, the country's statistics office said earlier this month. The Swedish government had cut its growth outlook for 2025 on Wednesday.
On Thursday, Swedish central bank also hinted at a potential further rate reduction next year.
"If the outlook for inflation and economic activity remains unchanged, the policy rate may be cut once again during the first half of 2025," it said.
— Sophie Kiderlin
French business confidence pulls back in December
French business confidence pulled back in December in the third consecutive decline, the country's statistics office Insee said Thursday.
The composite indicator came in at 94, below the long-term average of 100, as well as under the November reading of 96.
The business climate declined in the services, retail trade and building construction sectors, with the manufacturing sector emerging as an outlier, Insee said.
— Sophie Kiderlin
European markets fall over 1% as trading begins
European markets were lower as trading kicked off on Thursday, with the pan-European Stoxx 600 falling 1.26% shortly after markets opened. All sectors started the day in negative territory.
Major European bourses also pulled back, with Germany's DAX last 1.07% lower, the French CAC 40 falling 1.29% and the U.K.'s FTSE 100 down 1.17%.
— Sophie Kiderlin
German 10-year bund yield rises to trade at levels last seen in November
The yield on the German 10-year bund rose on Thursday, trading at levels last seen at the end of November according to CNBC data. It was last up by over 5 basis points to 2.295% at 7:43 a.m. London time.
The move higher comes after the U.S. Federal Reserve on Wednesday trimmed interest rates by 25 basis points, but signaled fewer cuts ahead.
Bond yields across Europe were higher Thursday after the announcement, with the yield on the French 10-year bond rising more than five basis points to 3.107% and Italy's 10-year bond yield jumping close to 8 basis points to 3.479%.
— Sophie Kiderlin
German consumer sentiment set to improve in early 2025 after recovering slightly
German consumer sentiment is set to improve in January 2025 after picking up at the tail end of 2024, according to a consumer climate report from GfK and the Nuremberg Institute for Market Decisions (NIM).
The consumer sentiment index increased to -21.3 points going into January from the previous month's revised reading of -23.1 points.
"Both income expectations and the willingness to buy rose in December, while the willingness to save decreased. As a result, the consumer climate is expected to improve slightly at the beginning of the new year," the report said.
Consumer sentiment remains low, however, and a "sustained recovery" is not expected yet due to ongoing uncertainty among consumers, Rolf Bürkl, consumer expert at NIM, noted. High food and energy costs and growing job insecurity are weighing on consumers, he added.
— Sophie Kiderlin
European markets: Here are the opening calls
European markets are expected to open in negative territory Thursday.
The U.K.'s FTSE 100 index is expected to open 84 points lower at 8,105, Germany's DAX down 265 points at 19,993, France's CAC down 105 points at 7,284 and Italy's FTSE MIB down 507 points at 33,876, according to data from IG.
Investors will be keeping an eye on European new passenger car registration data, Germany's Gfk consumer confidence figures and Spanish trade data. Monetary policy decisions are due from the Bank of England and Norges Bank, the central bank of Norway.
— Holly Ellyatt
Chinese yuan weakens past 7.3 as Fed cuts interest rates and ahead of PBOC decision
Chinese offshore yuan weakened to 7.3218 on the U.S. dollar on Thursday morning after the U.S. Federal Reserve lowered its key interest rate by 25 basis points in a widely anticipated move.
The People's Bank of China is set to release its monthly fixing of benchmark lending rates on Friday.
The one-year loan prime rate, which affects corporate and most household loans, was kept at 3.1% last month and the 5-year LPR, a benchmark for mortgage rates, was maintained at 3.6%, following a cut of 25 basis points in October.
Chinese authorities vowed to adopt a "moderately loose" monetary policy stance earlier this month, prompting the market to pencil in more rate cuts ahead.
— Anniek Bao
Fed cuts rates as expected, but signals less reductions next year
The Federal Reserve trimmed its overnight borrowing rate by 25 basis points on Wednesday, in a widely anticipated move.
This brings the Fed's borrowing rate to a target range of 4.25% to 4.5%. However, the central bank indicated it would likely only cut rates twice in 2025, according to its closely watched "dot plot," down from four cuts given in its last forecast.
— Brian Evans
