European stocks started higher on Thursday. The FTSE 100 only saw a small gain as investors reflected on Wednesday’s Federal Reserve decision and anticipated a likely interest rate cut from the Bank of England.
The FTSE 100 index increased by 8.20 points, or 0.1%, reaching 8,567.53. The FTSE 250 rose by 126.74 points, or 0.6%, to 20,463.74, and the AIM All-Share added 3.40 points, or 0.5%, reaching 716.66.
The Cboe UK 100 was up 0.1% at 853.18, the Cboe UK 250 increased by 0.3% to 17,901.63, and the Cboe Small Companies remained unchanged at 15,673.95.
In Paris, the CAC 40 rose by 0.5%. In Frankfurt, the DAX 40 added 0.6%.
The British pound fell to USD1.3284 early Thursday, down from USD1.3342 when London markets closed on Wednesday. The euro dropped to USD1.1290 from USD1.1344. Against the yen, the dollar rose to JPY144.42 from JPY143.39.
Fed Chair Jerome Powell stated that the Fed can be patient with its monetary policy while assessing the full impact of U.S. trade policies on the economy. He mentioned, “We think we can be patient; we will watch the data,” highlighting the uncertainty surrounding tariffs.
After a two-day meeting, the Federal Open Market Committee decided unanimously to maintain the federal funds rate at 4.25-4.50%.
In New York on Wednesday, the Dow Jones Industrial Average rose by 0.7%, the S&P 500 increased by 0.4%, and the Nasdaq Composite gained 0.3%.
In Tokyo on Thursday, the Nikkei 225 was up by 0.4%. In China, the Shanghai Composite rose by 0.3%, and the Hang Seng Index in Hong Kong increased by 0.3%. The S&P/ASX 200 in Sydney climbed by 0.2%.
The Bank of England will announce its interest rate decision on Thursday, with expectations for a rate cut.
Analysts at ING commented that “Today’s Bank of England meeting should be a market mover.” They expect a 25-basis-point rate cut to 4.25%. They also noted that how the Bank addresses its approach to future rate cuts will be crucial for the market.
They mentioned that if the Bank adopts a “gradual and careful” approach, the British pound might strengthen against other currencies.
Prime Minister Keir Starmer will update on trade talks with the U.S. later on Thursday, as reports suggest that Donald Trump is expected to announce a trade deal with the UK. Trump hinted at a “major trade deal” with a “big, highly respected country” on his platform, with a press conference scheduled for around 1500 BST.
Reports indicate that the deal is with the UK, following Trump’s recent imposition of tariffs on UK exports.
The UK government has been negotiating a deal to lessen the impact of these tariffs.
If Trump announces a deal, it will mark the first since these tariffs were established. Previous reports suggested that the UK may reduce some tariffs on American goods and alter a digital services tax affecting mainly U.S. tech companies.
However, the UK government has ruled out lowering food safety standards or weakening online safety regulations.
In London, shares in Next increased by 1.2%, reaching an all-time high. The company raised its annual profit outlook for the second time this year after a better-than-expected first quarter.
Next reported a jump in full price sales of 11% year-on-year in the thirteen weeks to April 26, exceeding its forecast by GBP55 million.
Next’s performance improved due to warmer weather, boosting retail sales.
The company raised its pretax profit forecast to GBP1.08 billion from GBP1.07 billion.
InterContinental Hotels Group’s shares rose by 2.6%. The company stated that it is on track to meet profit expectations for 2025 after strong trading in the first quarter. The revenue per available room increased by 3.3% year-on-year in the first quarter.
RevPAR rose by 3.5% in the Americas and 5.0% in Europe, the Middle East, Asia, and Africa, but fell by 3.5% in Greater China.