European Stocks Rebound as Fed Hikes Rates

By EC Assets · Published 18 September 2026

European stocks halted a two-week decline as the U.S. Federal Reserve delivered an interest rate increase. Markets in Europe recovered following the Fed's decision, with lower oil prices and eased bond yields supporting risk appetite. Investors had awaited the Federal Reserve’s decision on borrowing costs, which marked the first increase in three years. European shares rose on Thursday after the Federal Reserve's rate hike. Oil prices slipped, and global bond yields stabilized. The Federal Reserve raised interest rates for the first time since July 2023. This decision suggested rates might need to increase further. European shares had edged up from a three-month low on Wednesday as a pause in the oil price rally lifted risk appetite. Earlier, European markets had tumbled to multi-month lows as oil climbed above $113 and the Federal Reserve prepared rate changes. The Federal Open Market Committee (FOMC) showed its lowest level of worry about gross domestic product growth since it first began releasing its outlook. The FOMC statement explaining the quarter-point rate hike contained just 130 words. Bank of America calculates this as the most terse statement since 2007. The rate hike and hints of a Middle East peace deal boosted travel and auto shares. Traders were seen shrugging off the Fed hike. Investors are now focusing on the future rate path and a potential AI slowdown following the hike. Mortgage and refinance interest rates mostly increased today following the Fed's actions. Stocks are set for a bounce-back rally after a Fed-induced sell-off. Some European shares ticked lower due to telecoms weakness but remained poised for weekly gains. This article is intended for informational purposes only. It does not constitute investment advice.