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European stocks brush off Fed disappointment to edge higher

European stocks edged higher on Thursday after shrugging off the disappointment of the Federal Reserve ruling out a lengthy rate-cutting cycle. Read More...

European stocks edged higher on Thursday after shrugging off the disappointment of the Federal Reserve ruling out a lengthy rate-cutting cycle.

The Stoxx 600 SXXP, +0.51%   climbed 0.4% while the DAX DAX, +0.41%   began to turn around its poor week, lifting 0.4%, and the FTSE 100 UKX, +0.23%  nudged 0.1% higher.

The pound GBPUSD, -0.5592%   fell further to a 31-month low of $1.2116 as the dollar rallied following Fed chairman Jerome Powell’s comments on Wednesday.

What’s moving the markets?

The Fed cut rates by 25 basis points as expected on Wednesday but Powell disappointed markets by ruling out a “lengthy cutting cycle.”

U.S. stocks dropped sharply as a result and the Dow Jones Industrial Average closed 300 points down.

The disappointment spread to Europe as stocks opened lower on Thursday before recovering to make gains.

Speaking to MarketWatch, Erik Norland, senior economist at CME Group, said: “Most importantly for the markets, the Fed left the door open to further rate cuts without explicitly promising any further easing of policy.

“For their part, equity and bond markets both initially sold off slightly on the news as the Fed’s quarter point cut dashed some fairly modest hopes for more dramatic policy action.”

Which stocks are active?

Siemens SIE, -4.62%  declined 4.6% as the German industrial giant said a “significantly weaker” environment hit profits in the third quarter. The maker of high-speed trains and wind turbines blamed global trade tensions the industrial environment.

Royal Dutch Shell RDSA, -4.39%   reported that profits plunged 25% in the second quarter on lower oil and gas prices and weaker margins. The British-Dutch company’s stock fell 4.6% in early trading.

French bank Société Générale GLE, +4.62%   climbed 4.3% on Thursday despite restructuring costs impacted on net profits, which fell 14%. The bank increased its capital strength and outperformed a number of its rivals.

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