Europe midday: Stocks push higher after Fed leaves rates on hold

European stocks rose on Thursday after the Federal Reserve stood pat on rates but indicated a hike would come later this year.

At midday, the benchmark Stoxx Europe 600 index was up 1.3%, while Germany’s DAX and France’s CAC 40 were both 1.9% firmer.

Meanwhile, oil prices advanced as the dollar lost ground, with West Texas Intermediate up 1.1% to $45.82 a barrel and Brent crude 0.9% firmer at $47.26.

On Wednesday the Fed kept interest rates unchanged at between 0.25% and 0.50%, with three members dissenting in favour of an immediate 25 basis points hike. This was the first time in five years that three voters have dissented in the same direction.

Meanwhile, the Summary of Economic Projections was a bit more dovish, showing one hike this year and two next year, down from two and three, previously.

The central bank said the case for a rate increase has strengthened, leaving the door open to a move by the end of the year.

The Federal Open Market Committee said: “The Committee judges that the case for an increase in the federal funds rate has strengthened, but decided, for the time being, to wait for further evidence of continued progress toward its objectives.”

Goldman Sachs said its US economics team assigns a cumulative 65% probability to a rate hike by the 14 December FOMC meeting, which is roughly the same as implied by fed fund futures.

IG’s Joshua Mahony said: “European stock markets are following their US and Asian counterparts higher, as investors react to the FOMCs decision to leave rates unchanged once again. Whilst the committee decided against raising rates, it has not given up aspirations of implementing a rate rise at least once in 2016.

“December has seemed the likeliest month for some time, with the Fed likely to want the US election in November out of the way before such an important shift is implemented.”

In corporate news, shipping company Moeller-Maersk traded higher after announcing it will split into two separate units.

Micro Focus International was in the black after confirming its full-year guidance, while Kier Group rallied after its full-year numbers met analysts’ expectations.

Pub group Mitchells & Butlers gained ground after it reported a drop in full year sales but a rise in the most recent eight weeks of trading, as it reiterated that full-year margins will be below the previous year.

On the downside, EDF was in the red after it said on Wednesday that it was downgrading its expectations for 2016.

Rolls Royce was on the back foot after it appointed Stephen Daintith of the Daily Mail as chief financial officer from 2017.

Education publisher Pearson was also weaker after Exane BNP Paribas downgraded the stock to ‘neutral’ from ‘outperform’.

There are no major eurozone data due, but in the US, initial jobless claims are at 1330 BST, with leading indicators, existing home sales and consumer confidence at 1500 BST.