European markets open higher following Fed cut; Bank of England rate decision in focus

LONDON — European markets opened higher Thursday as investors digested the U.S. Federal Reserve’s first interest rate cut in four years and looked ahead to the Bank of England’s rate decision later in the session.

The pan-European Stoxx 600 index was up 1% in opening trade, with all major bourses and virtually all sectors in the green. Mining stocks added 2% while telecoms were the sole outlier, down 0.36%.

Retail stocks surged 2.17%, led by gains for British retailer Next, which added 5.8% after saying it was on track to make almost £1 billion ($1.32 billion) in annual profits following an uptick in first-half sales.

U.S. stocks initially jumped after the Fed announced a jumbo 50 basis point cut to interest rates, bringing its target range to 4.75% to 5.00%. However, markets ultimately closed lower amid concerns of a potential economic downturn. U.S. futures were seen lower overnight.

Trading in Asia-Pacific Thursday was choppy following the announcement, but stocks ultimately rose during Thursday’s session.

Back in Europe, investor attention is now turning to the Bank of England, with the central bank largely expected to hold rates steady at 5%. The Fed’s jumbo rate cut is unlikely to impact the Bank of England, according to economists, as the central bank ratified its decision around lunchtime Wednesday, hours before the U.S. announcement.

“The U.K. is looking very much at its own economy. The fact that the U.S. has now moved ahead with a 50 basis points rate cut, with more cuts to come, I don’t think is really going to impact the Bank of England’s point of view,” Tiina Lee, CEO at Citi UK, told CNBC’s “Squawk Box Europe” on Thursday.

Additionally, inflation in the U.K.’s closely watched services sector remains stubbornly higher, fresh data showed Wednesday, likely prompting caution from policymakers.

Also on Thursday, Norway’s central bank will deliver its latest interest rate decision.