Europe close: Record finish for stocks as Fed hikes rates

European stocks hit record levels on Thursday as investors digested the expected rate hike by the US Federal Reserve and the halt to Dutch populism in the Netherland’s election.

The benchmark Stoxx Europe 600 index was up 0.70% to 377.73 - its highest level since December 2015 - while Germany’s DAX rose 0.61% to 12,083.18 and France’s CAX gained 0.56% to 5,013.38.

Earlier in the day, the DAX and CAC rose to their highest levels since mid-2015.

Amsterdam's AEX rose 0.56% on the back of Dutch Prime Minister Mark Rutte gaining the most seats in the Dutch election with 95% of the vote counted.

Rutte’s VVD lost eight seats but remains the largest party with 33 seats, trailed by far-right Geert Wilders’ PVV with 20 seats. The Labour party were reduced to nine seats from 29, after suffering a historic defeat.

The Dutch election was a precursor to elections in France in April and Germany in September and “revived hope that the populist movement may have not spilled over the core European Union members”, Ipek Ozkardeskaya, senior market analyst at London Capital Group said.

"It especially revived faith that Marine Le Pen’s Front National could experience a similar rattle on the upcoming French elections".

Michael Baxter, economics commentator for The Share Centre, said: "The French election may throw up a quite different result. But the massive 81% turnout in the Dutch election seems to indicate that the threat of the Far Right has galvanized people – albeit with a distinct move to the right of centre within Dutch politics. Whether we see a similar effect in France is yet to be seen.

"If the Dutch election result proves to be the start of a trend, and we see similar backlashes against anti-EU parties in France and Germany later this year, then this will be positive for the euro, and moderately negative for sterling, creating more inflationary pressure."

The euro rallied after the Netherlands’ election results and after the US Fed hiked interest rates as expected on Wednesday to between 0.75% and 1% and indicated that further rate rises would be "gradual" and officials stuck to their outlook for two more rate hikes this year and three the next.

The euro edged lower by 0.05% against the dollar at 1.0727 but was 0.64% lower versus the pound to 0.8674.

The Bank of Japan maintained its short-term interest target of -0.1% as expected and a pledge to guide the 10-year government bond yield at around 0% through aggressive asset purchases. The Bank of England also stood pat on interest rates at 0.25%.

On the data front, Eurozone inflation rose to 2% on the year in February from 1.8% the month before, in line with both consensus and the initial estimate. Core inflation was unchanged at 0.9%, also in line with expectations and the initial estimate.

Meanwhile, Brent crude lost 0.43% to $51.59 a barrel and West Texas Intermediate was 0.47% lower at $48.63.

In corporate news, miners such as Antofagasta, BHP and Glencore, were on the front foot amid continued commodity prices, while Fresnillo, Randgold, Hochschild and Acacia were boosted as gold recovered after the FOMC meeting.

HeidelbergCement fell 1.76% after the company lifted its target for cost savings from the purchase of rival Italcementi from €400m to €470m thanks to faster-than-expected job cuts last year.

Anglo American climbed 8.62% after Indian billionaire Anil Agarwal’s family trust bought a 12% stake in the miner.