European stocks rise after Fed hike as oil slips, yields stabilise

European equities rallied on Thursday (Sep 17) following a 0.25 percentage point interest-rate increase by the US Federal Reserve. The Stoxx 600 index climbed 0.9 per cent to 642.6 points, with most regional markets moving higher. Metal mining shares were the top gainers, soaring 2.1 per cent. Automobile manufacturers increased by 1.7 per cent, with BMW, Renault and Volkswagen recording double-digit rises.

Brent crude oil continued its downward trend for a second consecutive day, though prices stayed above $100 a barrel. Despite this, Europe's energy sector still managed a modest 0.1 per cent gain. The Fed's first rate hike in three years on Wednesday bolstered the belief that major central banks are intensifying efforts to fight inflation.

US Treasury yields dropped as investors digested the decision and anticipated more rate hikes. Investment strategist Luca Bindelli attributed the market response to restoring Fed credibility and easing interest-rate volatility, which had previously pressured stock prices. The Bank of England held rates steady while cautioning that rising energy costs would fuel inflation.

The UK's FTSE 100 index surged 1.2 per cent, marking its largest one-day gain in over two months. Meanwhile, Sweden's Prime Minister Ulf Kristersson announced his resignation following a narrow victory by the centre-left opposition in parliamentary elections. The Social Democrats, led by former Prime Minister Magdalena Andersson, are poised to form the next government.

Sweden's stock market rose 1.1 per cent. Notable individual performances included Berentzen, a German spirits company, which jumped 19.4 per cent after confirming talks with potential buyer Sazerac. Polish e-commerce giant Allegro raised its 2026 earnings forecasts and reported stronger-than-expected second-quarter results, boosting its shares to the Stoxx 600's top spot.

Helvetia Baloise, a Swiss insurer, increased 5.3 per cent following better-than-anticipated half-year earnings. Conversely, Bilfinger, a German industrial services firm, suffered its largest daily decline ever, dropping 21.4 per cent after cutting its 2026 outlook for the second time. Raiffeisen Bank International fell 6 per cent after Grizzly Research revealed a short position in the Austrian bank.