European stocks rose Friday, reaching a one month high as investors responded to the US Federal Reserve’s recent interest rate cut, while Wall Street futures suggested lingering caution following a technology sector selloff.
Analysts said the Fed’s policy decision and ongoing uncertainty in global tech markets were shaping trading patterns on both sides of the Atlantic.
At 1038 GMT, the pan European STOXX 600 was up 0.3 percent, marking its highest level in a month. Major indexes also advanced, with the FTSE 100 rising 0.2 percent, Germany’s DAX up 0.3 percent, and France’s CAC 40 gaining 0.7 percent.
Meanwhile, the MSCI World Equity Index increased 0.2 percent. US S&P 500 futures were down 0.2 percent and Nasdaq futures fell 0.5 percent, reflecting concerns from the previous session’s tech slump.
The recent surge in European equities comes after the Federal Reserve cut interest rates by 25 basis points on Wednesday in a 9-3 vote.
The decision left market participants optimistic about additional rate reductions in 2026, even as Fed officials indicated that further cuts are likely to pause for the near term.
The move followed disappointing earnings guidance from Oracle, which reported higher than expected spending and weak forecasts.
The cloud computing giant’s announcement triggered a decline in tech shares on Wall Street, raising questions about the profitability of large scale investments in artificial intelligence.
“Investors are reacting to a mix of optimism and caution,” said Ed Hutchings, head of the developed market rates desk at Aviva. “The Fed’s rate cut supports sentiment, but tech earnings are causing some to step back before the weekend.”
Financial experts noted that Friday’s market movements reflect a balance between supportive monetary policy and sector specific volatility. Analysts also highlighted the importance of upcoming central bank meetings in shaping near-term trends.
“The European markets are benefiting from a temporary boost from the Fed, but traders are holding off major decisions until we see the Bank of England, European Central Bank, and Bank of Japan set their directions next week,” said Sofia Mendes, a senior strategist at EuroCapital Advisors.
The BoE is expected to announce a rate cut next Thursday, while the ECB is projected to maintain rates, though speculation about potential hikes in 2026 has emerged. Japan’s central bank is expected to raise rates after recent statements by Governor Kazuo Ueda hinted at tightening.
Despite the tech selloff, broader US markets maintained resilience. The S&P 500 and Dow Jones Industrial Average both hit record highs earlier this week, reflecting strong investor confidence outside the technology sector.
In currency markets, the US dollar was steady, with the dollar index up around 0.1 percent at 98.462. The index remained close to the previous session’s low, its lowest in nearly eight weeks, and was on track for a third consecutive weekly decline.
Analysts attributed the weakness to the Fed’s less hawkish outlook and an unexpected increase in US jobless claims, which rose by the most in four and a half years last week.
Traders in London and Frankfurt reported a cautious but generally positive mood. “We’re seeing moderate gains across European markets, but no one is making aggressive bets ahead of next week’s central bank decisions,” said Marcus Reilly, a portfolio manager at Global Asset Management in London.
In Paris, small cap investors expressed optimism about renewed liquidity in equities, though some emphasized caution regarding tech exposure. “The Oracle news reminds us that even big names can surprise,” said Camille Lefevre, a fund analyst.
Market watchers said the trajectory of European stocks will depend on upcoming central bank policy announcements and corporate earnings.
Expectations for potential rate cuts in the UK and cautious ECB guidance may support equities, while persistent concerns over technology investments could limit broader gains.
“The market is digesting multiple signals at once,” Hutchings added. “Investors are looking for clarity from next week’s meetings before committing to new positions.”
European stocks closed the week on a positive note, driven by supportive US monetary policy and resilient investor sentiment, even as technology sector worries tempered Wall Street futures.
Traders remain attentive to next week’s central bank actions, which are expected to shape the direction of global markets in the coming months.
