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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How to get help with your energy bills in the cold weather
Freezing couple covered with a blanket. Man and a woman wrapped in a warm blanket in a cold room. (Andor Bujdoso) Two in five people who pay energy bills say it’s difficult to stretch to the cost, and one in 20 say they’re behind on bills. The fact there’s no universal payment to cover higher energy bills this year means those who don’t qualify for any other help are finding bills particularly painful.
We’re already doing what we can to stay warm without putting the heating on. Previous government research found that the most common step was to put more clothes on, or huddle under blankets. This was followed by only heating the rooms we’re using, using hot water bottles, and going to bed earlier.
Taking steps to increase energy efficiency and cut waste is incredibly sensible at any time, including draught-proofing our homes and adding insulation. But despite everything we’re doing, the most recent data shows that one in five people are either only very occasionally warm at home right now – or they’re never warm enough to be comfortable.
More people have been forced to turn the heat off and cope with the consequences – and those consequences can be severe – especially for those who are already frail or in poor health. A cold home can be bad for your health and wellbeing, and anyone who is already struggling with mobility, lung problems or circulatory issues could face real risks.
It means we may need to look beyond simply cutting our energy use for a solution. There are a few schemes in place.
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eBay to cut 1,000 jobs
eBay headquarters in San Jose, California, USA (JHVEPhoto) Ebay has said it will cut 1,000 jobs, amounting to 9% of staff members, in the midst of a “challenging macroeconomic environment”.
It said it would also reduce its work for outside contracts.
In a statement sent to staff, eBay said it needs to be “more nimble” and that “overall headcount and expenses have outpaced the growth of our business”.
The announcement is its second round of job cuts in a year. Last February it said it would cut about 500 employees.
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Abrdn to cut 500 jobs
Exterior view at night of abrdn offices in St Andrew Square Edinburgh, Scotland, UK (Iain Masterton) Abrdn (ABDN.L) has warned it will cut around 500 jobs in a bid to cut costs by approximately £150m per year.
The investment firm said most of its savings would be from “non-staff costs”, mainly across its group functions and support services, but that it would remove management layers.
It expects the savings “to result in the reduction of approximately 500 roles.”
Stephen Bird, chief executive, said:
“Market conditions have remained challenging for our mix of business. The board and I are committed to taking these significant cost actions now to restore our core Investments business to a more acceptable level of profitability.”
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Watch: How does inflation affect interest rates?
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