European markets declined sharply on Thursday, tracking global losses after the US Federal Reserve signalled a slower pace of rate cuts in 2025 than previously anticipated.
Concerns over tighter monetary conditions weighed on investor sentiment across major regional indices.
The DAX 40 fell 0.8%, shedding 156 points to trade at 20,086. The downturn came after a marginal decline in the previous session.
Germany’s forward-looking consumer sentiment index improved to -21.3 for January, up from -23.1 in December, beating expectations of -22.6.
The CAC 40 slid 0.8%, losing 61 points to settle at 7,323. French banking majors BNP Paribas, Crédit Agricole, and Société Générale each dropped about 1%, following a global sell-off in financial stocks.
Luxury goods makers LVMH and Hermès, sensitive to US consumer sentiment and monetary policy, also saw declines.
However, Renault rose 1.2% after reports indicated that Foxconn is in talks with the automaker about potentially purchasing its stake in Nissan, a development that could reshape Renault’s strategy in the competitive auto sector.
Meanwhile, France’s manufacturing sentiment index remained steady at 97 in December, unchanged from November.
The FTSE 100 fell 1.10%, losing 90 points to trade at 8,109, as investors braced for the Bank of England’s final monetary policy decision for the year.
The central bank is widely expected to hold rates at 4.75%, with inflation exceeding the BoE’s 2% target.
The pan-European Stoxx 600 was down around 1% in early trade.
Cautious commentary from US Fed
With the expected rate cut in place, attention shifted to the Federal Reserve’s updated economic projections.
The Fed now anticipates interest rates will end 2025 in the 3.75%-4.0% range, higher than the 3.25%-3.50% forecast in September.
This adjustment aligns with revised inflation expectations, with consumer price growth projected at 2.5% in 2025, up from the earlier estimate of 2.1%.
Fed Chair Jerome Powell highlighted the need for further progress on inflation before considering additional rate cuts during the post-meeting press conference.
US markets on Wednesday
Overnight in the US, the Dow Jones Industrial Average tumbled 1,123.03 points, or 2.58%, to settle at 42,326.87, recording its first 10-day losing streak since 1974.
The S&P 500 declined 2.95% to close at 5,872.16, while the Nasdaq Composite fell 3.56% to 19,392.69.
What US stock futures are indicating
US stock futures rebounded on Thursday following the sharp selloff in the previous session, triggered by the Federal Reserve’s updated interest rate outlook for next year.
Dow futures rose by 166 points, or 0.4%, while S&P 500 futures gained 20 points, or 0.4%.
Investors will be hoping for the Dow to halt its record-breaking 10-day losing streak on Thursday.
Tech-focused Nasdaq 100 futures also advanced, up by 85 points, or 0.4%.
The post European stocks follow global peers after US Fed meet: DAX down 0.8%, FTSE 100 dips over 1% appeared first on Invezz
