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European markets stabilized as PMI data showed a return to growth in the Eurozone

Flash PMIs: Business activity in the Eurozone returned to growth in January

The eurozone economy returned to modest growth in December, according to new readings for the purchasing managers’ index on Tuesday.

The S&P global eurozone purchasing managers’ index, which includes manufacturing and services activity, came in at 50.2 in January, up from 49.3 in December and ahead of expectations of 49.8.

The index crossed the 50 mark that separates expansion from contraction for the first time since June.

The Eurozone’s dominant services sector index rose to 50.7 from 49.8 in December, while the manufacturing index improved to 48.8 from 47.8, also beating expectations but remaining in contraction territory.

– Elliott Smith

Stocks on the Go: Topdanmark Up 3%, Ambo Down 4%

Danish stocks were the biggest movers in both directions at Tuesday’s open.

Insurance company Topdanmark added 3.7% to top the Stoxx 600 following its fourth-quarter earnings report and dividend proposal, while the hospital equipment maker Ambo It fell 4.6% after SEB downgraded the stock to “sell” from “hold.”

El-Erian says Fed should raise 50 basis points, calls smaller increase a ‘mistake’

Inflation may have shown to be quite high in the past, but the shift to a 25 basis point hike at the next Fed policy meeting is a “mistake”, according to Allianz chief economic advisor Mohamed El-Erian.

“I’m in a very, very small camp, and I think they shouldn’t go to 25 basis points, they should do 50,” he told CNBC’s “Squawk Box” on Monday. “They should take advantage of this growth window that we’re in, they should take advantage of where the market is, they should try to tighten the financial conditions because I think we still have an inflation problem.”

He said inflation had shifted from goods to the services sector, but it could re-emerge if energy prices rise as China reopens.

El-Erian expects inflation to plateau at around 4%. This, he said, would put the Fed in a tough spot on whether it should continue to crush the economy to get to 2%, or promise that level in the future, and hoped investors could tolerate a steady 3% to 4% rate in the near term.

“This is probably the best outcome,” he said of the latter.

– Samantha Sobin

CNBC Pro: Wall Street is excited about Chinese tech — and loves one of the mega stocks

After more than two years of regulatory crackdowns and a pandemic-induced recession, Chinese tech names are back on Wall Street’s radar, with one stock in particular standing out as the top pick for many.

Professional subscribers can read more here.

– Xavier Ong

The Fed is likely to discuss next week when to halt increases, the Journal report says

Federal Reserve officials next week will almost certainly agree to another slowdown in rate hikes while also debating when to stop the increases altogether, according to a Wall Street Journal report.

The Federal Open Market Committee is scheduled to meet to set rates from January 31 to February. 1, with a 100% chance that markets will be priced at a quarter-point increase in the standard central bank rate. More importantly, Fed Governor Christopher Waller said on Friday that he sees a 0.25 percentage point increase as the preferred move for the next meeting.

However, Waller said he doesn’t think the Fed is done tightening yet, and many other central bankers have backed that idea in recent days.

Slowing the pace of the increases may provide an opportunity to assess the impact of the increases so far on the economy, the Journal report said, citing public statements from policymakers. A series of price increases starting in March 2022 resulted in increases of 4.25 percentage points.

Market prices currently suggest quarter-point hikes at the next two meetings, a period of inaction, and then a reduction of up to half a point by the end of 2023, according to CME Group data.

However, several officials, including Governor Lyle Brainard and Federal Reserve Bank of New York President John Williams, have used the expression “stay the course” to describe the course of policy going forward.

– Jeff Cox

European Markets: Here are the opening calls

European markets are set to open positive on Tuesday ahead of the Eurozone PMI (Purchasing Managers’ Index) data for January.

United kingdom FTSE 100 index The index is expected to open the top 10 at 7801, German Dax 18 points higher at 15,122 in France kk Up 12 points at 7049 and Italy FTSE MIB It was up 81 points at 25,945, according to IG data.

There are no big earnings releases Tuesdays.

– Holly Ellytt

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