Europe midday: Shares rally after Fed cut; Oracle, politics in focus

(Sharecast News) - European shares rallied from morning lows on Thursday after the US Federal Reserve cut interest rates and pencilled in only one reduction in 2026, while geopolitical tensions were also in focus as US forces seized an oil tanker off the coast of Venezuela.

The pan-European Stoxx 600 reversed morning losses to be up 0.20% to 579.32 at 1204 GMT. The central bank's policy committee on Wednesday signalled caution over near-term decisions amid a stalling inflation rate and signs of weakness in the labour market.

In its final meeting of 2025, the Federal Open Market Committee voted 9-3 in favour of a rate cut, with the Federal Funds Rate being trimmed by 25 basis points to a range of 3.5% to 3.75%.

The decision was in line with moves made in September and October, and the sixth rate cut since September 2024, bringing borrowing costs to their lowest since 2022.

However, the scope of the dissent among policymakers was stark, with Austan Goolsbee and Jeff Schmid voting for no change to rates, while Trump-appointed Stephen Miran called for a 50bp reduction. This was the first time since 2019 that three FOMC members dissented.

In a statement, the FOMC said available data has shown that economic growth had continued at a "moderate pace", though job gains have slowed and the jobless rate has edged up. Meanwhile, inflation has moved up slightly since earlier in the year and still remains "elevated".

Any boost from the Fed's decision was cut short when Oracle reported rising capital expenditure and weak cash flows.

"Oracle has been at the epicentre of the artificial intelligence financing debate, lacking the mammoth cash flows of the more traditional cloud giants (Alphabet, Amazon and Microsoft)," said Hargreaves Lansdown analyst Matt Britzman.

"As usual, the baby's going out with the bathwater, and the entire futures market is trading lower - likely a mix of AI funding fears coupled with the slow realisation that we may not see another rate cut for some time."

Meanwhile, the US seized the tanker claiming it was used to transport sanctioned oil between Venezuela and Iran as authoritarian President Donald Trump's escalated his campaign against the South American nation's dictator, Nicolas Maduro.

In equity news, Carl Zeiss shares jumped after posting results.

Entain fell as it said chief financial officer Rob Wood, who is also deputy chief executive, was set to step down after 13 years with the gambling and gaming group. Wood, who will leave in March 2026, is being replaced by Michael Snape, chief financial officer at International Distribution Services.

Reporting by Frank Prenesti for Sharecast.com