18th Sep 2025 09:00
(Alliance News) - European stocks moved higher in early dealings on Thursday, shaking off mixed trade in New York following a Federal Reserve rate cut and subsequent comments from Chair Jerome Powell.
"Markets weren't sure how to take the news. The S&P 500 swung before closing just 0.1% lower," Swissquote analyst Ipek Ozkardeskaya commented.
"The US 2-year yield rebounded and the dollar index bounced from a fresh yearly low. Today's session will be key to gauge whether risk appetite holds. Early signs are positive."
On Thursday afternoon, the Bank of England is expected to hold rates, with eyes on an announcement on the pace of the reduction of its of UK government bond holdings, or quantitative tightening.
The FTSE 100 index rose 15.52 points, 0.2%, at 9,223.89. The FTSE 250 fell 13.08 points, 0.1%, at 21,606.73, and the AIM All-Share was down 0.78 of a point, 0.1%, at 771.08.
The Cboe UK 100 was up 0.1% at 923.45, the Cboe UK 250 was 0.1% lower at 18,906.36, but the Cboe Small Companies was 0.1% higher at 17,252.81.
In Paris, the CAC 40 was up 0.8%. In Frankfurt, the DAX 40 powered 1.1% higher.
In New York on Wednesday, the Dow Jones Industrial Average rose 0.6%, but the S&P 500 lost 0.1% and the Nasdaq Composite shed 0.3%. Equity market futures are pointing higher for all three benchmarks on Thursday, however.
The yield on the US 10-year Treasury was quoted at 4.05% early Thursday, widening slightly from 4.04% at the time of the London equities close on Wednesday. The yield on the US 30-year Treasury was quoted at 4.65%, stretching a bit from 4.64%.
The pound fell to USD1.3615 on Thursday morning, from USD1.3661 at the time of the London equities close on Wednesday. The euro fell to USD1.1819 from USD1.1847, while against the yen, the dollar rose to JPY147.20 from JPY146.35.
The Federal Reserve on Wednesday cut rates as it grapples with complicated moving parts in the labour market and in inflation, providing the central bank with a "curious balance".
Federal Reserve Chair Jerome Powell said inflation risks are tilted to the upside, but conversely, the labour market is fighting downside risks.
"A challenging situation," Powell told reporters in a press conference after the decision was announced.
At the conclusion of its two-day meeting, the Federal Open Market Committee voted to lower rates to the 4.00%-4.25% range. It was its first cut of the year. The sole dissenting voice was newly appointed board member Stephen Miran, who backed a 50bp cut.
Powell labelled it a "risk management cut".
"Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated," it added.
In considering "additional adjustments to the target range for the federal funds rate," the FOMC said it will "carefully assess incoming data, the evolving outlook, and the balance of risks."
Analysts at ING believe the dollar's outlook is still "bearish" despite bouncing in the wake of the Fed decision.
"We interpret yesterday's Fed decision as a net negative for the dollar, and think that some 'sell the fact' and positioning readjustment have exacerbated the dollar rally during and after the presser. Expect the USD to lower in the coming days," ING analysts said.
"Today, eyes will be on the BoE's QT announcement. Regarding forward guidance, we don't expect anything new. The BoE has pointed to cautious and gradual easing for some time, and recent data hasn't pointed to a shift to directional guidance. Markets should continue to infer the MPC mood from the vote split. Our call is 6-3, with Swati Dhingra, Alan Taylor and Dave Ramsden voting for a cut."
The BoE decision is at midday. After that, eyes turn to the latest US initial jobless claims data at 1330 BST. According to consensus cited by FXStreet, numbers are expected to show initial claims for unemployment insurance are to ease to 240,000 from 263,000.
Gold declined to USD3,648.52 an ounce early Thursday, from USD3,685.67 at the time of the closing bell in London on Wednesday. A barrel of Brent fell to USD67.50 from USD68.04.
In London, Next shares fell 5.9%. The retailer backed its annual guidance but cautioned on a softer UK outlook. Earnings for its first half improved.
"There is another reason to be cautious. The medium to long-term outlook for the UK economy does
not look favourable. To be clear, we do not believe the UK economy is approaching a cliff edge. At best we expect anaemic growth, with progress constrained by four factors: declining job opportunities, new regulation that erodes competitiveness, government spending commitments that are beyond its means, and a rising tax burden that undermines national productivity," it warned.
The clothing and homewares retailer's pretax profit in the six months to July 26 improved 18% to GBP509.0 million from GBP432.1 million a year prior. Revenue advanced 9.9% to GBP3.14 billion from GBP2.86 billion. Full price sales during the period improved 11%, Next said.
For the full-year it still expects full price sales of GBP5.44 billion, a rise of 7.5% on-year. Pretax profit of GBP1.11 billion is still predicted, a rise of 9.3% on-year.
Elsewhere in the retail space, Pets At Home slumped 15%. It downgraded its profit outlook amid a "subdued" pet retail market. It also announced the immediate departure of its Chief Executive Officer Lyssa McGowan. A search for a permanent replacement has kicked off, while Non-Executive Chair Ian Burke becomes executive chair until one is found.
"Our existing guidance assumed a central scenario for Retail of 1% market growth against which we expected to return to market outperformance through FY26 as the investments we made in digital bore fruit. Through Q2, the underlying pet retail market has remained subdued, declining slightly year to date," the firm said.
"Against this, we have seen the performance of the Retail business improve sequentially, narrowing the gap to the market, but the rate of improvement has been below expectations. We continue to see double-digit digital sales growth, outperforming the online retail market supported by our improved digital platform and strong growth in Easy Repeat subscriptions. In contrast, our store sales have proved more challenging, declining 5% year to date."
Pets At Home now expects annual underlying pretax profit in a GBP90 million to GBP100 million range, its outlook lowered from GBP110 million to GBP120 million.
Elsewhere, Capricorn Energy jumped 12% with investors encouraged by progress in Egyptian receivables.
The energy producer, with assets in Egypt, hailed a "solid operational performance" in the first half.
It swung to a pretax loss from continuing operations of USD7.5 million for the first half of 2025, from profit of USD16.4 million a year prior. Revenue fell 26% to USD59.7 million from USD80.8 million. The average price per barrel of oil falls on-year to USD73.6 from USD78.6, it said.
However, it celebrated an improved receivables position.
"Reducing the group's Egypt receivables position continues to be a key strategic priority," it said.
The receivables position stood at USD172 million as at the end of the first half.
It added: "Since 30 June 2025, Capricorn has received USD37 million of the minimum USD90 million expected to be collected in H2. At 31 August 2025, overall accounts receivable had reduced to USD160 million, with further improvement expected by year end."
By Eric Cunha, Alliance News news editor
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