European Stocks Rise on Global Optimism and Expected Fed Rate Cut

European stock markets opened higher on Wednesday, August 13, 2025, buoyed by global optimism and the increasing likelihood of a U.S. Federal Reserve interest rate cut in September. The EuroStoxx 50 index climbed 0.76% to 5,376.74 points, reflecting positive sentiment from U.S. and Asian markets. Investors are pricing in a nearly 94% probability of a 25-basis-point reduction by the Federal Reserve in September, following recent cooling inflation data and signs of a slowing labor market in the U.S. This anticipation has contributed to a weakening of U.S. Treasury yields.

The Swiss Market Index (SMI) saw a modest increase of 0.1% to 11,897.45, and the UK's FTSE 100 index rose by 0.13% to 9,159.41, marking its third consecutive session of gains. The positive trend across European markets was also supported by a 90-day pause on additional tariffs for Chinese imports, which has helped to ease trade tensions. In the technology sector, SAP shares advanced by 2.18% to €237.05, with some analysts viewing this as a recovery from a previous sell-off. Conversely, the energy sector experienced a downturn, with oil majors like Shell and BP seeing slight declines following the International Energy Agency's (IEA) downward revision of its global oil demand growth forecast for 2025-2026. The IEA now projects global oil demand to increase by 680,000 barrels per day in 2025, a slight reduction from its previous estimate, citing weaker-than-expected demand in non-OECD countries. Vestas shares dipped by 1.5% amid concerns over a 44% year-over-year drop in its second-quarter order intake, attributed to customer uncertainty regarding future wind energy policies, particularly in the U.S. market.