European stocks closed higher Thursday as investors reacted to the latest policy decisions from the Bank of England and the U.S. Federal Reserve.
The pan-European Stoxx 600 index closed up by 0.9%, with all sectors and most major bourses in positive territory.
European markets held their gains despite data showing that euro zone business activity grew at its weakest pace in five months in September. IHS Markit’s flash composite Purchasing Managers’ Index (PMI) data, seen as a gauge of the region’s economic health, fell to a five-month low of 56.1 in September from 59.0 in August.
In other news, the Bank of England on Thursday kept monetary policy unchanged and downgraded economic growth projections for the third quarter of this year. Britain’s FTSE index was down 0.1%, while sterling rose 0.8% versus the dollar, to $1.37.
European investors were also digesting comments from the Federal Reserve which indicated on Wednesday that it doesn’t see an imminent rollback of the monetary stimulus that has been supporting the economy throughout the pandemic.
“If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the Fed’s post-meeting statement said, however. The central bank has been buying $120 billion a month of Treasurys and mortgage-backed securities since the start of the Covid crisis.
The Federal Open Market Committee voted unanimously to keep short-term rates anchored near zero on Wednesday and was still split on the timing of the first interest rate hike. Wednesday’s so-called dot plot of projections showed nine of the 18 FOMC members expect a rate increase in 2022, up from seven in June’s Fed projections.
Shares in Asia-Pacific ended Thursday’s session mostly higher, as investors in Asia-Pacific continued monitoring the situation surrounding China Evergrande Group.
Shares of China Evergrande Group in the city jumped 17.6%, following days of losses — although its year-to-date plunge is still more than 80%.
On Wall Street, U.S. stocks jumped for a second day as fears around a crisis in China’s property market eased and as traders welcomed the Fed’s latest monetary policy move.
Back in Europe, EDF said Wednesday it was in talks to buy the nuclear operations of General Electric in France. Shares of the French utility firm climbed 2.7% on Thursday.
At the bottom of the Stoxx 600, British sports betting firm Entain sank 4.8%, with investors taking profits after the stock had soared on the back of a takeover bid from U.S. rival DraftKings.
