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Europe ends higher after Fed liftoff; DAX up 2.6%; oil weighs

European markets posted strong gains during Thursday's session, closing higher, after the U.S. Federal Reserve announced its first interest rate rise in almost a decade.

Uncertainty removed

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The pan-European STOXX 600 came off highs to close 1.2 percent up provisionally, as weak trade in the U.S. and a sharp drop in U.S. crude prices capped gains during the afternoon session.

Global markets reacted positively after uncertainty over the timing of a rate hike was finally removed. The Fed announced its first hike since June 2006 on Wednesday, raising its target federal funds rate to a range of 0.25 to 0.5 percent.

In a press conference, Fed Chair Janet Yellen announced that policy would remain accommodative and that the significance of the first hike should not be overblown, causing U.S. markets on Wednesday to rally.

"The committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate. The federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run," Yellen said.

Read More Here's how the Fed actually raises interest rates

The main market spoiler at the moment is oil. WTI remains under pressure, trading over 2 percent down at the close, at $34.79, pressured by a relentless build in oversupply and the news of a Fed rate rise. Higher interest rates tend to support the dollar, making oil and other dollar-denominated commodities more expensive, further dampening demand. Brent last stood around $37.20.

In individual oil stocks, Seadrill and Sbm Offshore both sunk over 7 percent, while the basic resources sector was the worst performing sector, down 0.9 percent, as the Fed news also pushed some commodity prices lower.

Financial firms get boost from Fed

A number of stocks got a boost from the Fed's interest rate hike, particularly names in the financial services, banks and insurance sectors.

Old Mutual and AXA, both insurance names, closed trade sharply higher, while Investec finished up above 3.5 percent.

Dutch insurer Delta Lloyd surged over 6 percent after the Dutch central bank said the firm was ready for Europe's new regulatory regime for insurers called Solvency II.

The European banking sector was also higher after many U.S. banks said they would raise consumer borrowing rates. While many of the European banks are tied to the moves of the Bank of England and the European Central Bank, the positivity around the first steps to normalization boosted the share price of banks including Natixis and UBS.

And Standard Chartered shot up over 7 percent, after Reuters reported that Temasek, a top investor in the bank, would give it more time to perform a turnaround before considering what to do with its sizeable stake in the firm.

Airlines win EU ruling; Casino tanks

Meanwhile, airline stocks were higher after the General Court of the European Union backed an appeal by a group of 11 carriers against an 800 million euro fine slapped on them by the European Commission. British Airways owner IAG, Air France-KLM and Ryanair all closed higher.

Accor, the owner of Sofitel and Ibis hotel chains, finished up 2.7 percent. This comes after Hilton Worldwide shares jumped Wednesday on a report the company could spin off hotel properties into a real estate investment trust.

Volkswagen shares popped 4.3 percent on news that Ulrich Eichhorn, the former managing director of the German automotive industry group the VDA, would head a new research and development unit at the struggling carmaker. VW also announced that the number of top managers who report to the chief executive will be halved.

Shares of French retailer, Casino Guichard tanked as much as 18 percent, after research firm Muddy Waters, said it was one of the "most overvalued and misunderstood" companies it had every come across, Reuters reported. Shares closed down 11.5 percent.