Flash PMIs: UK activity suffers sharp contraction in January
In contrast to an apparent pick-up in euro zone business activity in January, flash PMI (purchasing managers’ index) readings from the UK on Tuesday showed the economy contracted at its sharpest pace in two years.
The S&P Global composite UK PMI, which covers services and manufacturing, missed the consensus forecast of 48.5 in a Wall Street Journal survey of economists, falling to 47.8 in January from 49.0 in December.
Widespread strike action, labor shortages, export losses, a cost-of-living crisis and sharp interest rate hikes are all weighing on economic activity, S&P Global said.
– Elliot Smith
Flash PMIs: Eurozone business activity returns to growth in January
The euro zone economy returned to modest growth in December, according to new flash PMI (purchasing managers’ index) readings on Tuesday.
The S&P Global euro zone composite PMI, which covers manufacturing and service activity, rose to 50.2 in January from 49.3 in December and ahead of the consensus forecast of 49.8.
The index crossed the 50-point mark that separates expansion from contraction for the first time since June.
The euro zone’s dominant services sector index rose to 50.7 from 49.8 in December, while the manufacturing index rose to 48.8 from 47.8, beating forecasts but remaining in contracted territory.
– Elliot Smith
Stocks on the move: Topdanmark rose 3%, Ambu fell 4%
Danish stocks were the biggest movers in both directions at the open on Tuesday.
Insurer Topdanmark added 3.7% to lead the Stoxx 600 after its fourth-quarter earnings report and dividend proposal, while hospital equipment maker Both of SEB fell 4.6% after cutting the stock to “sell” from “hold”.
El-Erian says the Fed should raise 50 basis points, calling a smaller increase a ‘mistake’
Rising inflation may be largely in the past, but moving to a 25 basis point hike at the Federal Reserve’s next policy meeting is “a mistake,” according to Mohamed El-Erian, chief economic adviser at Allianz.
“I’m in a very, very small camp that they shouldn’t go down 25 basis points, they should do 50,” he told CNBC’s “Squawk Box” on Monday. “They need to take advantage of this growth window that we’re in, take advantage of where the market is and try to tighten financial conditions because I think we still have an inflation problem.”
Inflation has shifted from goods to services, he said, but could very well rebound if energy prices pick up as China reopens.
El-Erian expects inflation to rise to around 4%. This will leave the Fed in a difficult position, he said, whether they can continue to squeeze the economy to 2% or promise that level in the future and hope that investors can hold out for a period closer to a steady 3% to 4%. .
“It’s probably the best outcome,” he said.
– Samantha Subin
CNBC Pro: Wall Street is excited about Chinese tech and loves a mega-cap fund
After more than 2 years of regulatory pressure and a pandemic-induced recession, Chinese tech names are back on Wall Street’s radar, with one stock in particular standing out as a top pick for many.
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– Xavier Ong
The Fed will discuss when to end hikes next week, the Journal report said
Federal Reserve officials are expected to confirm another rate hike next week, while also debating when to stop the hikes. In a Wall Street Journal report.
The Federal Open Market Committee, which sets the rate, will meet in January. 31-February 1, with Sundays price with almost 100% chance A quarter point increase in the Central Bank’s discount rate. Most importantly, Fed Governor Christopher Waller said on Friday I see an increase of 0.25 percent as a preferred action for an upcoming meeting.
However, Waller said he does not think the Fed is tightening yet, and that a number of other central banks have backed that view in recent days.
Citing public statements by policymakers, the Journal’s report said slowing the pace of growth could provide a chance to assess what effects past increases have had on the economy. A series of rate hikes beginning in March 2022 resulted in an increase of 4.25 percentage points.
According to data from the CME Group, market prices now point to quarterly increases over the next two meetings, a period of inactivity and then a decline of up to half a point by the end of 2023.
However, a number of officials Including Governor Lael Brainard and New York Fed President John Williams used the phrase “stay the course” to describe the policy path ahead.
– Jeff Cox
European markets: Here are the opening calls
European markets are headed for a positive opening on Tuesday ahead of flash PMI (purchasing managers index) data for the eurozone in January.
of Great Britain FTSE 100 The index is expected to open at the level of 7,801, increasing by 10 points in Germany DAX 18 places up 15,122, France CAC 7,049 and Italy, up 12 places FTSE MIB Up 81 points to 25,945, according to IG data.
There are no major earnings releases on Tuesday.
– Holly Elliott
