TLDR
- The STOXX 600 rose 0.5%, with Germany’s DAX, France’s CAC 40 and the FTSE 100 all gaining around 0.4-0.6%
- The Federal Reserve raised interest rates by 0.25%, its first hike since 2023, which markets absorbed calmly
- President Trump signaled optimism about a possible Iran peace deal ahead of UN General Assembly meetings
- Travel and auto stocks led gains, with Ryanair, Lufthansa, BMW and Volkswagen all up around 1%
- Bilfinger crashed 19.5% after cutting its 2026 outlook for the second time, while Berentzen jumped 19.4% on takeover talk
European stock markets moved higher on Thursday after the U.S. Federal Reserve raised interest rates and President Trump hinted at a possible peace deal in the Middle East.
The pan-European STOXX 600 index gained 0.5%, reaching 640.21 points. Germany’s DAX, France’s CAC 40, and the UK’s FTSE 100 all posted gains of between 0.4% and 0.6%.
The Fed raised rates by a quarter of a percentage point, its first hike since mid-2023. Markets had widely expected the move, and the reaction was relatively calm.
“Investors took some comfort from the Fed standing firm in the face of Donald Trump’s noisy demands for lower rates and so it adds to the credibility of the Fed,” said Susannah Streeter, chief investment strategist at Wealth Club.
Fed Hike Sends Steady Signal to Markets
Federal Reserve Chair Kevin Warsh made clear the central bank was focused on tackling energy-driven inflation. Rather than selling off, markets read the hike as a sign of institutional strength.
“Markets absorbed the hike relatively calmly because it was almost fully priced, but the reaction turned more defensive,” said Daniela Hathron, senior market analyst at Capital.com.
Investors were focused less on the hike itself and more on what the Fed signals next. Long-dated Treasury yields stayed below the 5% mark after the decision.
The European Central Bank also raised rates for a second time this year last week, lifting its rate to 2.5%. The Bank of Japan is widely expected to follow with a 25-basis-point hike to 1.25% on Friday.
Travel and Auto Stocks Lead the Gains
Lower oil prices gave travel stocks a boost. Crude extended losses for a second session after reports that Saudi Arabia was offering extra cargo through Oman, though Brent crude stayed above $100 a barrel.
Ryanair rose 1.1% and Lufthansa climbed 1.2%. Automakers also did well, with BMW, Renault and Volkswagen each rising around 1%.
Europe’s energy sector gained 0.4% despite the dip in crude prices. HSBC and AstraZeneca helped push the FTSE 100 higher.
Sodexo shares jumped 4.4% after JP Morgan upgraded the French catering company to overweight. Berentzen surged 19.4% after confirming takeover talks with U.S. drinks maker Sazerac.
On the other side, Bilfinger fell 19.5% in its biggest intraday drop on record after the German industrial services firm cut its 2026 outlook for the second time. Raiffeisen Bank International dropped 8.1% after Grizzly Research disclosed a short position on the stock.
Eurozone inflation came in at 3.2% annually in August, slightly below the initial estimate of 3.3%. The Bank of England was expected to hold rates steady later in the day, with markets watching for any signals about further tightening from Governor Andrew Bailey.
Trump also said he hoped the seven-month Iran conflict was nearing an end and that Tehran was eager to reach a peace deal. He is expected to meet Gulf leaders at the UN General Assembly.
Stop guessing and start investing with confidence. KnockoutStocks gives you the AI insights, market intelligence, and stock research you need to spot opportunities, cut through the noise, and make smarter investment decisions — all in one powerful platform.
Sign up today and get 50% OFF full access to our premium stock picks.
Simply use coupon code SPECIAL50 at checkout to claim your exclusive discount.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
