Europe open: Fed rate cuts signal sparks rally as Stoxx gains 1.6%

(Sharecast News) - European shares surged at the open on Thursday as the US Federal Reserve signalled interest rate cuts in 2024, sparking a rally in equities. The pan-European Stoxx 600 index was up 1.6% to 480.2 in early deals with all major bourses on the rise. In the US, the Dow Jones index closed at a record high as the Fed said it expected to cut rates three times next year after holding its benchmark steady in a range of 5.25% to 5.5%.

Eyes will now turn to the Bank of England and European Central Bank for more decisions on Thursday. Both are expected to keep rates on hold.

''There is enthusiasm in the air that the punishing rate hikes of the last two years will start being reversed, sooner rather than later. The Fed's acknowledgement that cuts will come in 2024 has fuelled positivity," said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

"But there remains deep reluctance to declare that the inflationary fight is over. It's clear that members of the Federal Open Market Committee are still concerned about strong job gains amid low unemployment."

"Just three interest rate cuts are pencilled in for next year, while the futures markets predict six will come, expecting the US economy to cool more rapidly ahead. "

"Energy giants are also making strides as oil prices recover. As the 24 hours of crucial central bank decisions ticks down, policymakers are expected to keep showing more dovish tendencies but are still set to stay behind the market curve when it comes to expectations of looser monetary policy."

In equity news, AMS-Osram soared more than 10% after Jefferies upgraded the Austrian electronics company's stock to 'buy' from 'hold'.

Vivendi shares climbed 9% after the French media giant announced that it is considering breaking up into several listed entities.

Reporting by Frank Prenesti for Sharecast.com