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![Skyline of Frankfurt am Main. The FTSE and European stock were in the green on Wednesday](https://moneylowdown.com/wp-content/uploads/2024/01/3378f590-ba96-11ee-9dfe-aceed0bb643f.jpeg)
European stock markets were in positive territory on Wednesday as the UK private sector grew at its fastest pace in seven months and new data revealed that the German economy will grow less than expected this year.
In London, the FTSE 100 (^FTSE) was up 0.4% by afternoon trade, with mining stocks dominating the risers board, and the pound (GBPUSD=X) pushing higher. Meanwhile the CAC (^FCHI) gained 0.9% in Paris, and the Frankfurt DAX (^GDAXI) advanced 1.4%.
According to S&P Global’s Flash Composite purchasing managers index (PMI), January’s reading hit 52.5, up from 52.1 in December, the third consecutive month it came in above the 50 mark, which separates growth from contraction.
However, private sector firms recorded the steepest rise in input costs since August, driven by renewed cost pressures in the manufacturing sector, as bosses reported higher freight costs in the wake of the Red Sea crisis.
It came as the Ifo Institute forecast 0.7% growth in Europe’s largest economy, which is on the brink of a recession, compared to a prediction of 0.9% last month.
The pound rose on the back of the news on Wednesday as economists also warned that the latest PMI survey data indicated that interest rates could remain higher for longer amid concerns over inflation.
Sterling has gained 0.6% against the dollar to move towards $1.28 and has risen 0.1% versus the euro, which is worth 85p.
Across the pond, US markets underwent another record-breaking session with the Nasdaq 100 (^IXIC) and S&P500 (^GSPC) securing new record highs, while the Dow (^DJI) finished the day lower, as Netflix (NFLX) beat expectations after the closing bell on its Q4 numbers.
“Last night’s positive finish in the US [has seen] markets in Europe open higher again today, though we could well struggle to hang onto the gains if recent experience is any guide,” said Michael Hewson, chief markets analyst at CMC Markets.
!If the ECB ever had a reason to think about cutting rates, then today’s manufacturing and services PMIs would offer a compelling reason but for the fact that headline inflation is at 2.9% and core inflation is at 3.4%, and policymakers have insisted that tackling prices is their priority.
Let’s see how if that consensus holds out tomorrow when the ECB meets for the first time this year.”
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