European Stocks Surge as U.S. Federal Reserve Implements Significant Rate Cut

European stocks increased by nearly 1% following a 50-basis-point rate cut by the U.S. Federal Reserve, signaling further measured easing. The STOXX 600 index climbed as most sectors saw gains. Investors await the Bank of England's rate decision, with British stocks Next and Ocado Group showing significant growth.

European stocks received a notable boost on Thursday, jumping nearly 1% after the U.S. Federal Reserve executed a 50-basis-point rate cut. The Fed's move has raised hopes for a soft landing for the American economy, sparking optimism across global markets.

As of 0712 GMT, the continent-wide STOXX 600 index was up 0.9% at 519.15 points. However, not all sectors mirrored this optimism; telecom stocks dipped by 0.6%. The U.S. central bank's aggressive rate cut, which brings the benchmark policy rate down to a range of 4.75%-5.00%, marks the beginning of its monetary easing cycle.

In a statement, Fed Chair Jerome Powell highlighted the aim of the cut was to maintain a low unemployment rate, following signs of easing inflation. All eyes are now on the Bank of England's rate decision set for 1100 GMT, with Britain's FTSE 100 already up by 0.9% in pre-verdict trading.

Among notable stock movements, British retailer Next rose by 4.4%, driven by an optimistic profit forecast close to 1 billion pounds ($1.3 billion). Meanwhile, British online grocery giant Ocado Group experienced a surge of 12.6% in its share price after revising its revenue forecast for 2023-2024 upwards. Conversely, IG Group shares slipped by 2.7% as the trading day commenced, attributed to the company trading without rights to its latest dividend payout.

(With inputs from agencies.)