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Europe close: Stoxx 600 at two-week high as DAX hits new record

(Sharecast News) - European stocks rose strongly on Wednesday as stimulus measures in China and solid corporate earnings lifted Germany's benchmark index to a record high, as investors largely shrugged off weak economic data. The pan-European Stoxx 600 index jumped 1.2% to 476.93 - its highest close since 9 January - with broad-based gains across the continent.

However, Germany's DAX index was outperforming the rest of Europe, surging 1.6% to an all-time closing high of 16,889.92 on the back of well-received results from heavyweights Siemens Energy and SAP.

Markets across the globe were broadly higher on Wednesday after China's central bank said it would cut the amount of cash lenders must hold in the latest move designed to bolster the country's ailing economy. This follows news on Tuesday that Beijing is considering a £220bn rescue package for Chinese stock markets, which have struggled compared to other benchmarks worldwide.

Macro indicators weaken

The Institute for Economic Research now forecasts that German gross domestic product is likely to grow by just 0.7% in 2024, down from a previous forecast of 0.9% in response to drastic cuts to the government's 2024 budget amid a funding shortfall.

Business activity in the eurozone fell at the slowest rate for six months in January, according to provisional survey data released on Wednesday, albeit with downturns persisting in both manufacturing and service sectors amid further falls in new business.

The flash eurozone composite purchasing managers index came in at at 47.9 compared, still in contraction - indicated by a reading below 50.0 - but up from 47.6 in December. However, the consensus forecast was for a pick up to 48.0.

Meanwhile, the services business activity index hit a three-month low of 48.4 from December's 48.8, while the manufacturing output index was 46.6, from 44.4 - a nine-month high.

Siemens Energy and SAP jump

Siemens Energy surged 9% after first-quarter results came in better than expected. The energy company said revenues rose 13% to €7.65bn, 4% ahead of consensus, while adjusted profits came in at €208m, up from a loss of €282m the year before.

Software company SAP jumped 8% after the company released its latest financial results and announced plans to restructure 8,000 jobs in a push toward artificial intelligence growth.

Also in Frankfurt, carmakers were responding positively to news of stimulus from China, with Volkswagen, Mercedes-Benz and Daimler Truck finishing higher.

Shares in Dutch semiconductor equipment maker ASML also gained 9% after results beat expectations, although it forecast flat revenues for 2024.

Puma shares fell sharply after the German sportswear maker said it expected 2024 sales growth in mid-single-digits, compared with previous guidance of high single-digits after results were hit by the extraordinary devaluation of the Argentine peso by 54% in December 2023.

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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