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European markets tick higher ahead of flash PMI data

European markets nudged higher on Tuesday with investors awaiting the latest flash purchasing managers’ index data from the euro zone in January.

The pan-European Stoxx 600 index was up 0.3% in early trade with tech stocks climbing 0.6% to lead gains as most sectors and major bourses entered positive territory.

PMIs track business activity in the services and manufacturing sectors. Last month, euro zone PMI data signaled that the slowdown in business activity was easing so investors will be hoping to see that trend continue.

Elsewhere overnight, markets in the Asia-Pacific traded higher as Lunar New Year holidays were observed in most of the region. Meanwhile, U.S. stock futures were largely flat on Tuesday morning as investors looked to continue a strong start to the week during a busy stretch of corporate earnings.

Surging inflation may appear largely in the past, but a shift to a 25 basis point hike at the next Federal Reserve policy meeting is a “mistake,” according to Allianz Chief Economic Adviser Mohamed El-Erian.

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

Inflation, he said, has shifted from the goods to the services sector, but could very well resurge if energy prices rise as China reopens.

El-Erian expects inflation to plateau around 4%. This, he said, will put the Fed in a difficult position as to whether they should continue crushing the economy to reach 2%, or promise that level in the future and hope investors can tolerate a steady 3% to 4% nearer term.

“That’s probably the best outcome,” he said of the latter.

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