Economics provided the main driving force behind global markets last week, as Alan Greenspan’s congressional testimony indicated that US economic progress remains on track. The re-emergence of M&A activity gave corporates a boost, helping to reverse recent earnings-inspired profit-taking. TMT Nasdaq: 2073 from 2064 Merger frenzy gripped the technology sector last week, as investors digested a number of takeover attempts. PeopleSoft’s rejection of rival Oracle’s $9.4bn offer sent both stocks plunging – PeopleSoft said the bid was inadequate and would meet substantial opposition from US antitrust regulators. Juniper Networks upped its efforts to compete with bellwether Cisco Systems by announcing the takeover of technology security provider NetScreen Technologies. ST Assembler’s $1.2bn takeover of US semiconductor ChipPac spurred chip buying. Semiconductors were given a further boost by an upbeat sector outlook from Tokyo Electron. Comcast’s unsolicited $66bn for media giant Walt Disney livened the media sector, sparking strong gains. Disney’s advance was amplified by speculation that other players may join the bidding. Europe FTSE Eurotop 300 ex UK: 1077 from 1059 The strengthening euro kept European investors subdued last week, although optimism in the banking sector and an oil sector rally provided a distraction for the market. As well as concerns that interest rates in the US will remain lower for longer than borrowing costs in Europe, the single currency extended its appreciation when the ECB commented that it disapproves of short-term action to influence exchange rates. Financials were in focus after fourth-quarter profits and a record dividend from UBS exceeded even the most bullish forecasts. Energy companies made headway after Opec’s shock decision to trim production targets sent oil prices soaring. Meanwhile, economic numbers were less vigorous than expected. France’s GDP expanded by 0.5% in the fourth quarter and Germany’s economy grew by a meagre 0.2%. US Dow Jones: 10694 from 10593 Federal Reserve chairman Alan Greenspan’s midweek testimony to Congress was the main focus of market attention last week. Stocks were muted in the run-up to Greenspan’s speech, but soared to fresh multi-month highs after the Fed chairman suggested that the economy continues to grow at a robust pace and that he sees no urgency in raising interest rates. Lacklustre weekly jobless claims and an unexpected fall in retail sales dampened the mood on Thursday. Meanwhile, a rise in merger and acquisition activity cheered the market by providing a clearer indication of growing corporate confidence. Juniper Networks’ $4bn takeover of NetScreen Technologies inspired a rally midweek, while the market applauded Comcast’s unsolicited $66bn bid for media giant Walt Disney. The week ahead Investors worldwide will look to the US this week as updates on monthly industrial production and inflation in the US are released. There will also be plenty of non-US data for global investors to digest – Japan’s fourth-quarter GDP, eurozone industrial production and UK retail prices will be of particular interest. UK FTSE 100: 4412 from 4403 Corporate profits grabbed investors’ attention last week, as a mixed bag of numbers kept the FTSE 100 fluctuating. Airline stocks took flight after BA posted its strongest profits in 12 years, while a sharp rise in profits from BSkyB provided more ammunition to the already rallying media sector. Still, lacklustre earnings and a cautious outlook from GlaxoSmithKline dragged pharmaceuticals lower. Mobile phone leader Vodafone’s long-awaited admission that it is interested in acquiring AT&T Wireless failed to win over investors, who rotated into rival mm02. Merger rumours also circulated in the financial sector. Mixed economic data failed to provide any clarity for investors. The British Retail Consortium provided some good news by announcing that retail sales hit a 10-month high in January. Conversely, the UK manufacturing outlook fell for the second consecutive month. Asia Pacific FTSE Asia/Pacific ex Japan: 233.24 from 226.26 Pacific Asian markets endured considerable volatility last week, eagerly following US developments for a lead. Long-held hopes that MSCI would upgrade South Korea and Taiwan’s weightings to developed market status on its world equity index were dashed on Friday. An upgrade would have encouraged increased foreign fund inflows into the areas, but the decision had little impact on trading. Banking stocks were active after Bank of East Asia posted expectation-beating profits for 2003, but Kookmin Bank’s fourth-quarter loss was almost double the size of estimates. Meanwhile, following the weekend G7 meeting, China’s central bank pledged to review its exchange rate mechanism for the yuan, indicating that it may allow the currency to trade more freely. Japan Nikkei 225: 10558 from 10461 Buoyant economic figures brightened the mood in Japan, even though concerns over the weakening US dollar persisted. Wariness of the yen’s prolonged appreciation is leading investors to shift their investments away from export-related issues into domestic-orientated stocks. Investors were distracted from these worries by a plethora of impressive economic numbers. Household spending rose 0.4%, consumer sentiment improved for the first time in three months, machinery orders soared in December and the nation’s current-account surplus soared to a record high in 2003. Significantly, wholesale prices stopped falling in January for the first time in 41 months, suggesting that the burden of deflation may finally be easing.