European Stocks Tick Up as Investors Turn From Trump to Fed, BoE

European stocks edged higher on Thursday after missing out on a Trump victory rally on Wall Street as traders turn their focus to widely expected interest-rate cuts from both the US Federal Reserve and the Bank of England.

(Bloomberg) — European stocks edged higher on Thursday after missing out on a Trump victory rally on Wall Street as traders turn their focus to widely expected interest-rate cuts from both the US Federal Reserve and the Bank of England.

The Stoxx Europe 600 Index was up 0.3% at 09:20 in Paris, with miners and insurers leading gains and retailers and healthcare among laggards. Utilities pared some of Wednesday’s losses and renewable energy shares were mixed after their drop amid fears the new US administration will move against the sector. Autos also recovered after sliding Wednesday on concerns about US import tariffs.

Among individual stocks, payment firm Adyen tumbled as much as 13% after third-quarter net revenue fell short of analyst expectations as the payment firm’s volume growth decelerated. 

RWE shares rose after activist investor Elliott Investment Management built up a sizable stake in the company and called the German utility’s management to consider a share buyback. 

In Germany, Frankfurt’s DAX 30 blue chip index rose 0.8% after Chancellor Olaf Scholz moved to force an early election after divisions over how to revive the lackluster economy triggered the breakup of his fractious three-party ruling coalition. Separately, data showed Germany’s industrial production falling more than economists expected in September.

“The fact Scholz is calling for elections is a first step going in the right direction for Europe, the area needs a leadership interested in growing German economy,”said Arnaud Girod, head of economics and cross-asset strategy at Kepler Cheuvreux in Paris.

“I think this is positive for European markets which I don’t see continuing to fall while US stocks march on higher,” he added. 

So far this year, European stocks have widely underperformed their US peers, with the Stoxx 600 gaining a meager 5.8% against 24% snatched by the S&P 500, lifted by prospects of a second Trump administration and a resilient economy.    

“I expect European markets to start making some comeback as soon as in the coming sessions,” Girod added. 

The Fed’s expected 25 basis points at the end its two-day meeting Thursday comes amid a surge of 10-year Treasury yields on expectations the president-elect’s policy agenda will boost inflation and erode policy makers’ ability to lower rates further down the road.

“US yields can’t continue to go up with US equities on the rise; my conviction is that yields will calm down,” Girod said. 

For more on equity markets:

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• M&A Watch Europe: RWE, CRH, Baloise, Scor, Colonial, Banco BPM
• Abu Dhabi Grocer’s IPO Draws $37 Billion of Orders: ECM Watch
• US Stock Futures Little Changed; AppLovin, Lyft, Dutch Bros Gain
• Not Just a Clothing Comeback: The London Rush

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—With assistance from Michael Msika.