European markets trade higher as Trump win settles in; Fed, BOE decisions in focus

The election rally in the stock market is one for the history books.

The S&P 500 jumped 2.5% on Wednesday to hit its 48th record high of the year, and the advance marked the best post-election gain in the benchmark’s history, according to Deutsche Bank’s Jim Reid, head of global economics and thematic research.

Trump’s agenda of lower corporate tax rates, deregulation and policies that favor domestic growth are believed to boost the U.S. economy and benefit risk assets.

The large-cap benchmark is up 24.3% this year.

— Yun Li

Initial jobless claims data came in roughly in-line with estimates on Thursday morning at 221,000. Economists surveyed by Dow Jones were expecting 220K claims for the week ending Nov. 2.

The four-week moving average for initial claims is now 227,250, according to the Department of Labor.

Continued jobless claims came in at 1,642,554 for the week ending Oct. 19, down a little more than 9,000 from the previous reading.

— Jesse Pound

As the Bank of England pressed ahead with a quarter-point interest rate cut, some analysts turned to the question of how far Britain’s monetary policy can be eased.

“A cooling labour market should help maintain downward pressure on services inflation in the coming months,” said Hussain Mehdi, director for investment strategy for HSBC Asset Management, in emailed comments.

“But the latest U.K. budget is likely to add to inflationary pressures over the longer-term. We are in an era of ‘forever deficits’ reflecting political priorities to boost growth and productivity.”

The current “fiscal activism” marks a steep policy shift from the 2010s “when austerity was counterbalanced by monetary policy on steroids,” he added, forecasting a “fairly shallow easing cycle” for the Bank of England and upcoming pressure on bond yields — which jumped in the minutes after the British central bank’s decision.

A higher-for-longer interest rate environment could erode investors’ ability to rely on government bonds to hedge their portfolios, according to Mehdi.

— Ruxandra Iordache

Sterling ticked higher after the Bank of England announced its second interest rate cut this year, up 0.39% against the U.S. dollar at 12:11 p.m. in London, while the euro lost 0.07% against the British pound.

Interest rate trims typically reduce support for a country’s currency. Foreign exchange markets this week have been dominated by the rippling effect of the U.S. election.

Currency markets may also be taking guidance from the BOE’s cautious tone on the trajectory of potential future rate cuts:

“We need to ensure inflation stays low. So we will not cut rates too quickly or too much,” it said in its November report.

U.K. borrowing costs retreated after the Bank of England implemented its second interest rate trim this year. The yield on Britain’s 10-year and 2-year bonds — known as gilts — lost nearly 2 and 4 basis points at 12:15 p.m. London time, respectively.

A bond’s yield typically moves inversely to its price and in line with interest rates.

— Ruxandra Iordache

Sterling jumped following the BOE’s decision to cut rates Thursday.

The British pound climbed 0.3% to trade at $1.2929 by 12:05 p.m. London time.

The Bank of England on Thursday cut interest rates by 25 basis points, marking its second trim this year.

The widely anticipated reduction brings the central bank’s key rate to 4.75% after it began its easing cycle in August.

— Karen Gilchrist

Banco BPM saw its share price jump almost 10% Thursday to make it the best performer on the Stoxx 600 index.

The move higher came after the Italian bank said it would launch a buyout offer for asset manager Anima Holding.

Banco BPM said late on Wednesday that it would make the 1.6 billion euro ($1.7 billion) bid through its insurance business, allowing it to minimize the use of capital thanks to favorable rules known in the industry as “Danish compromise,” Reuters noted.

Deutsche Bank’s Giovanni Razzoli described the bid as a “a smart move on a smart company” in a research note.

— Holly Ellyatt

Climate change prevention is becoming far more significant for insurance companies as they face rising losses from destructive weather events, such as hurricanes and floods.

Zurich Insurance Group’s Chief Financial Officer Claudia Cordioli told CNBC that the insurer had seen “very severe cat [catastrophe] and weather losses, not only in the U.S., but also in Europe this year.”

Hurricanes Helene and Milton that ravaged the U.S. in early fall, along with other severe weather events such as the floods that hit Central Europe and Spain, have brought the loss impact within the industry “to a considerable level,” she said Thursday.

“And if you think that over the last seven to nine years, [severe weather events] have brought to insurers more than $100 billion of losses. It gives a sense of the magnitude of the weather and climate topic for the insurance industry,” she added.

In an earnings update released earlier on Thursday, Zurich Insurance said third-quarter results included an estimated pre-tax loss of $160 million owing to Hurricane Helene. It also noted preliminary pre-tax losses attributable to Hurricane Milton are estimated to be less than $200 million in the fourth quarter. Shares of the insurer were up 0.4% Thursday.

— Holly Ellyatt

Shares of British engine maker Rolls-Royce lost 4.39% at 10:10 a.m. London time, after the company maintained its profit outlook in its latest trading update.

Rolls-Royce on Thursday said its current trading was “in line” with its full-year guidance issued in August, which forecast underlying profit between £2.1 billion ($2.71 billion) and £2.3 billion, and free cash flow between £2.1 billion and £2.2 billion in 2024.

“Continued good performance year to date gives us further confidence in the delivery of our 2024 guidance despite a supply chain environment which remains challenging,” CEO Tufan Erginbilgic said in a statement. “We are also making good progress towards our mid-term targets, with a front-end loaded delivery of profit and cash flow improvements.”

The company nevertheless noted that conditions in the aerospace industry supply chain remain “challenged,” while noting it has focused its effort on 15 suppliers.

Rolls-Royce is set to release its full-year results on Feb. 27 and previously said it will reinstate shareholder distributions starting at a 30% payout ratio of post-tax underlying profit.

Sweden’s Riksbank cut interest rates by 50 basis points on Thursday and signaled further trims to come as global central banks are seen syncing their monetary policy easing.

The bumper reduction — its first such move in a decade — brings the bank’s key rate to 2.75% and follows a previous 25 basis points cut in September.

“If the outlook for inflation and economic activity remains unchanged, the policy rate may be cut again at the next monetary policy meeting in December and during the first half of 2025,” the bank said in a statement.

— Karen Gilchrist

U.K. borrowing costs ticked slightly lower Thursday ahead of the Bank of England’s rate decision, softening a recent rally that has pushed gilt yields to their highest level in more than a year.

The 10-year gilt yield slipped two basis points to trade at 4.536% by 9:30 a.m. London time, while the 2-year gilt yield was three basis points lower at 4.481%. Yields move inversely to prices.

Bond yields spiked last week as investors pondered the extent of excess borrowing and increased taxes announced in the Labour government’s Oct. 30 budget. That rally has since continued into this week, with 10-year yields hovering near their highest level since October 2023 following the conclusion of the U.S. presidential election on Wednesday.

Wizz Air shares lost 6.72% at 09:11 a.m. London time, after the European budget airline posted a 33.2% drop in operating profit in the six months to Sept. 30.

The company reported operating profit over the period that came in at 349.2 million euros ($375.9 million), compared with 522.9 million euros in the same six-month stretch of 2023.

The airline said the decline reflected “cost inefficiencies” resulting from grounded Airbus aircraft due to engine inspections. It said that 41 of its aircraft were grounded as of Sept. 30, down from 46 at the end of June, and forecast average groundings of 40-45 aircraft over the next 18 months, compared with a previous outlook near 50.

On the upside, the company noted “positive momentum” in the ensuing six months in terms of bookings and yield, “notwithstanding the volatile geopolitical situation in the Middle East.”

Wizz Air’s operations in the Israeli city of Tel Aviv have been suspended until the middle of January.

— Ruxandra Iordache

Donald Trump’s historic election victory over Vice President Kamala Harris is likely to dent the outlook for European stocks, according to one strategist.

“I think Europe is seen as a loser of a Trump presidency,” Emmanuel Cau, head of European equity strategy at Barclays, told CNBC’s “Squawk Box Europe” on Thursday.

“A lot of that was priced in, right? Definitely in the last six months, we have seen European equities underperforming on the expectation that Trump would win and would put some tariff policy that would be negative for Europe, and that’s what we got yesterday, right?” he added.

“So, the risk is priced in but it’s still very weird now that Trump has been elected,” Cau said.

His comments come after a surge in U.S. stocks on Wednesday, with the Dow Jones Industrial Average soaring by more than 1,500 points. By contrast, European stocks closed lower in the previous session.

— Sam Meredith

Adyen reported a jump in sales in the third quarter as the Dutch payments firm gained wallet share and added new customers, diversifying its merchant mix.

The company, whose technology allows businesses to accept payments online and in-store, reported third-quarter net revenue of 498.3 million ($535.5 million), up 21% year-over-year on a constant currency basis.

It comes after Adyen shares tanked nearly 40% in a single day last August on the back of worse-than-expected sales and declining profits.

Read the full earnings story here.

– Ryan Browne

U.K. supermarket group Sainsbury’s has reported a 3.7% rise in retail underlying operating profit for the first half of the fiscal year.

The U.K.’s second-largest supermarket chain said retail underlying operating profit rose to £503 million ($650.7 million) in the six months to Sept.14 , up from £485 million in the same period last year.

It added that it expected to deliver retail underlying operating profit in 2024/2025 of between £1.01 billion and £1.06 billion and growth of between 5% and 10% from the previous year.

The supermarket group added that the strong growth of Sainsbury’s and its Nectar loyalty scheme was partially offset by a lower contribution from Argos, its general merchandise offering.

“We remain confident of delivering strong profit growth in the full year, with continued leverage from Sainsbury’s grocery volume growth and a stronger Argos H2 [second half] performance,” Sainsbury’s said in a statement.

— Holly Ellyatt

Delivery Hero reported a jump in third-quarter revenues Thursday and updated sales forecasts, saying it now expects full-year earnings to come in at the lower end of its previous guidance.

The Berlin, Germany-headquartered food delivery firm said that sales in the three months ending in September grew by 24%, driven by stronger monetization.

Gross merchandise value (GMV), which is the total value of orders processed through its platform, climbed 9% year-over-year, with the Middle East and North Africa (MENA) accounting for the bulk of the growth.

Annual GMV growth in the MENA region was 30%, boosted by a 25% year-over-year increase in regional order volumes. The strong MENA growth comes as Delivery Hero plans to spin off its Middle East business Talabat and float it on the Dubai stock exchange later this year.

Delivery Hero also updated guidance Thursday, noting that it now expects revenue growth for the full year to come in at the upper end of its 18% to 21% guidance.

Full-year adjusted earnings before interest, tax, depreciation and amortization (EBITDA), meanwhile, is now expected to come in at the lower end of 725 million euros to 775 million euros, Delivery Hero said.

— Ryan Browne

The Federal Reserve likely will stick to the business at hand when it wraps up its meeting Thursday with another interest rate cut, but will have its eye on the future against a backdrop that suddenly has gotten a lot more complicated.

Financial markets are pricing in a near-certainty that the central bank’s Federal Open Market Committee will lower its benchmark borrowing cost by a quarter percentage point as it seeks to “recalibrate” policy for an economy that is seeing the inflation rate moderate and the labor market soften.

The focus, though, will turn to what’s ahead for Chair Jerome Powell and his Fed colleagues as they navigate a shifting economy — and the political earthquake of Donald Trump’s stunning victory in the presidential race.

Read more on the story here: The Fed is expected to cut interest rates again Thursday. Here’s everything you need to know

— Jeff Cox

Donald Trump’s 2024 presidential win has raised the bar for China’s fiscal stimulus plans, expected Friday.

On the campaign trial, Trump threatened to impose additional tariffs of 60% or more on Chinese goods sold to the U.S. Increased duties of at least 10% under Trump’s first term as president did not dent America’s position as China’s largest trading partner.

But new tariffs — potentially on a larger scale — would come at a pivotal time for China. The country is relying more on exports for growth as it battles with a real estate slump and tepid consumer spending.

Read more on the story here

— Evelyn Cheng

Adyen reported a jump in sales in the third quarter as the Dutch payments firm gained wallet share and added new customers, diversifying its merchant mix.

The company, whose technology allows businesses to accept payments online and in-store, reported third-quarter net revenue of 498.3 million ($535.5 million), up 21% year-over-year on a constant currency basis.

It comes after Adyen shares tanked nearly 40% in a single day last August on the back of worse-than-expected sales and declining profits.

Read the full earnings story here.

– Ryan Browne

President-elect Donald Trump’s aggressive tariff policy may not be set in stone yet, according to JPMorgan’s Michael Feroli. 

“We think odds of a 10% across-the-board tariff in 2025 are low, in part for procedural reasons,” the analyst wrote in a Wednesday note. “China, on the other hand, is likely to face significantly higher effective tariffs.”

Throughout his campaign, the former president has vowed to implement across-the-board tariffs of 10% to 20% on imports entering the U.S. Meanwhile, for Chinese goods, he’s proposed a levy of between 60% to 100%.

— Sean Conlon

Here is how stocks can perform into year-end, now that markets have gotten past the election, according to Goldman Sachs’ Scott Rubner.

Historically speaking, stocks rally into year-end from Election Day. However, the S&P 500 and Russell 2000 perform even better during presidential election years, while the Nasdaq Composite does worse.

Take a look at their historical performance between Nov. 5th through Dec. 31st.

• Historically, the S&P 500 rises 2.68% on average from Nov. 5th to Dec. 31st, in data going back to 1928. However, in election years, the broader index rallies 3.38% over the same time period.
• Typically, the Nasdaq gains an average 5.53% between Election Day and year’s end, in data going back to 1985. In election years, however, the benchmark gains just 0.79% over the same period.
• In its history, the Russell 2000 gains 5.70%, on average, going back to 1979. In election years, the small-cap index surges 7.94% from Nov. 5th to December 31st.

— Sarah Min

Dutch behemoth ASML has been a favorite among investors this year, but Goldman Sachs has adopted a cautious stance on the stock and removed it from its conviction list of top stocks.

Besides ASML, Goldman also removed several stocks from its Europe conviction list for November, and refreshed it by adding others

The stocks are featured in the investment bank’s “Conviction List – Directors’ Cut,” which it says offers a “curated and active” list of buy-rated stocks.

CNBC Pro subscribers can read more here.

— Amala Balakrishner

Chinese electric vehicle stocks extended their losses after Donald Trump won the U.S. presidential elections.

Geely Automotive and BYD Co were among the top losers on Hong Kong’s Hang Seng index, shedding 2.61% and 3.32%, respectively, Eikon data showed.

Other EV makers also fell, with Nio losing 2.86% and Xpeng down 1.42%. Xiaomi, which recently entered the EV market, was down 1.81%.

European markets are expected to open in mixed territory Thursday.

The U.K.’s FTSE 100 index is expected to open 14 points higher at 8,159, Germany’s DAX up 25 points at 19,063, France’s CAC down 12 points at 7,341 and Italy’s FTSE MIB up 23 points at 33,703, according to data from IG.

Earnings are set to come from Zurich Insurance, Daimler Truck, Lanxess, Veolia, Legrand, Novonesis, National Grid, Sainsbury’s, ITV, BT, Telefonica, ArcelorMittal, Munich Re, Heidelberg materials, Rheinmetall, Tate & Lyle, EDP, Euronext and AF-KLM.

German trade balance data will be released and the Bank of England announces its latest monetary policy decision.

— Holly Ellyatt