Europe close: Stocks rise as Trump confirms his Fed chair pick

30th Jan 2026 16:18

(Sharecast News) - European shares extended gains on Friday as market volatility eased and investors focussed on US president Donald Trump's decision to nominate Kevin Warsh as the next chair of the Federal Reserve.

The pan-European Stoxx 600 rose 0.64% to 611, with Germany's DAX up 0.94% at 24,538.81, France's CAC 40 gaining 0.68% to 8,126.53 and the UK's FTSE 100 adding 0.51% to 10,223.54.

Dan Coatsworth, head of markets at AJ Bell, said it was "a potentially big day for financial markets amid chatter that Donald Trump will announce his pick for the new Federal Reserve chair," adding that reports suggesting Warsh was primed for the role were being taken positively by investors earlier.

"Investors seem to be taking this as a positive sign in terms of Fed independence - with Warsh perceived as a more orthodox choice versus some of the other mooted names," he said.

Trump confirmed the nomination on Friday, praising Warsh as someone who would "go down as one of the GREAT Fed Chairmen, maybe the best."

Warsh, who served as a Fed governor between 2006 and 2011 and was the youngest ever appointee at 35, also represented the central bank at the G20 and acted as an emissary to Asian economies.

Trump highlighted Warsh's role in producing an independent report for the Bank of England on monetary policy reforms, which he said were adopted by Parliament.

Warsh, 55, is due to replace Jerome Powell when his term ends in May, subject to Senate approval.

Markets appeared to interpret the nomination as limiting the scope for aggressive easing next year.

Coatsworth said the reaction in currencies and futures suggested "the thinking that Warsh won't be a marionette for the Trump administration," adding that it implied "the chances of aggressive rate cuts in 2026 regardless of the backdrop, something which Trump has not been shy in calling for, are slimmer."

The announcement followed fresh criticism from Trump directed at Powell after the Fed held rates steady at 3.5% to 3.75% on Wednesday.

Trump described Powell as a "moron" for not cutting rates, arguing that inflation was no longer a threat.

Warsh was seen as relatively hawkish during his time at the Fed, but has more recently called for lower rates.

Susannah Streeter, chief investment strategist at Wealth Club, said Warsh had earned a hawkish reputation but had "recently been publicly advocating for a fresh cut in interest rates, aligned with Trump's thinking," while adding that his experience suggested he would "hold the line if sharp inflationary pressures return."

David Morrison, senior market analyst at Trade Nation, said Warsh appeared to be "a good choice that most can get behind," noting he was unlikely to be a "pushover" on rate cuts.

Patrick Munnelly, market strategy partner at TickMill, said markets had been volatile in anticipation of the decision, noting that "stocks and US Treasuries declined amid growing speculation that president Trump is leaning toward nominating Kevin Warsh as the next Federal Reserve chair."

He added that Warsh, "considered a more hawkish option compared to other candidates, has sparked mixed reactions from investors," with traders adjusting expectations for future monetary policy.

Economic data paints mixed but resilient picture

Economic data painted a mixed but resilient picture for Europe.

Preliminary figures showed eurozone GDP grew 0.3% quarter on quarter in the final three months of 2025, beating forecasts for a 0.2% rise, with the wider EU matching that pace.

Annual growth stood at 1.3% in the euro area and 1.4% across the EU, consistent with a slow, uneven recovery, while full-year growth was estimated at around 1.5%.

Spain and Portugal each expanded 0.8% in the quarter, Lithuania led gains with 1.7% growth and Ireland was the only country to contract, shrinking 0.6%.

Germany grew 0.3%, while French growth slowed.

Ahead of next week's European Central Bank meeting, Munnelly said the data was unlikely to materially shift the policy debate, arguing it seemed "unlikely that the prevailing narrative - that policy is 'in a good place' - will shift significantly," even if growth deviates modestly from forecasts. He added that foreign-exchange dynamics were increasingly relevant, with a stronger euro "importing some disinflationary pressure," though not enough on its own to justify another rate cut.

Eurozone unemployment fell to 6.2% in December, and Spanish inflation eased to 2.4% in January, offering some relief on prices.

In contrast, German inflation surprised to the upside in January, with annual consumer price growth rising to 2.1% from 1.8% in December, while core inflation increased to 2.5%.

Carsten Brzeski, global head of macro at ING, said the rise was driven by less favourable energy price effects and sharp increases in food and healthcare costs.

In the UK, Bank of England data showed mortgage approvals fell to an 18-month low of 61,013 in December, while the effective rate on new mortgages eased to 4.15%.

Munnelly noted that British business confidence dipped in January alongside a broader cooling in global optimism, though a Lloyds survey suggested firms "remained optimistic about their own performance and hiring plans, even amid broader uncertainty."

Adidas jumps on record sales, Signify shares dim

In equities, Adidas jumped 3.94% after reporting record 2025 sales and announcing a share buyback of up to €1bn, lifting rival Puma by 0.56%.

French IT group Alten surged 16.75% after posting a smaller-than-expected fourth-quarter revenue decline.

Swatch Group climbed 13.42% on results, while Spain's CaixaBank rose 6.75% after beating profit expectations.

On the downside, Signify slumped 17.16% after unveiling €180m of cost cuts affecting 900 jobs and launching a strategic review following weaker-than-expected annual results.

Reporting by Josh White for Sharecast.com.