Overview

World roundup
The continued influence of mergers and acquisitions was evident in global markets last week, as investors applauded the $41bn merger of Cingular and AT&T Wireless. Meanwhile, strong earnings gave a boost to European indices, and Asia was happy to receive strong economic numbers.

Nasdaq: 2046 from 2054
A variety of positive indicators swept the technology sector last week, even though trepidation gripped investors as the Nasdaq approached the key 2100 level. The telecoms sector remained in focus, as Cingular emerged as the winner of an auction for rival US mobile-phone operator AT&T Wireless with a cash offer of $41bn.
Chip stocks benefited from a Worldwide Semiconductor Equipment Market Statistics report, which showed a rise in global chipmaking equipment, while strong financials and a bullish outlook from semiconductor bellwether Applied Materials added to the upside. However, global markets shuddered after US semiconductor data for January came in below expectations.
In the media sector, investors absorbed Disney’s rejection of Comcast’s unsolicited $66bn takeover bid, while a return to profits from Reuters helped the financial information company to soar to a 20-month high midweek.

Dow Jones: 10665 from 10628
Volatility beset trading in the US market, as light volumes exacerbated fluctuations in a holiday-shortened week. Corporate dealmaking stole the limelight once again as the market cheered a $41bn merger between national telecoms giants Cingular and AT&T Wireless – a deal that created the largest mobile phone company in the US. As the hysteria cooled, investors looked to fundamentals for guidance and were given encouraging signals.
A decline in weekly jobless claims and record-beating manufacturing data both helped to bolster sentiment. However, even expectation-busting earnings and bullish forward guidance from technology giant Applied Materials, coupled with an upbeat report from retail titan Wal-Mart, could not prevent profit-takers from dragging stocks down as the week came to a close.

FTSE Eurotop 300 ex UK: 1089.13 from 1067.30
Currency concerns continued to plague European bourses last week, but could not stop a slew of positive earnings sending markets to 19-month highs. The US dollar slid to a record low against the euro on speculation that the European Central Bank will not intervene to stem the rise of the single currency.
Meanwhile, the relentless rise of the euro was highlighted by Volkswagen, as the automaker reported a steep fall in 2003 profits and lowered its dividend for the first time in a decade. Still, investors cheered a host of upbeat earnings.
UK bank Royal Bank of Scotland and mineral giant BHP Billiton were among the stocks helping to propel the region’s markets on Thursday, while attractive numbers from cosmetics giant L’Oréal were well received as the week wound down.
Source: Fund analysis company Forsyth Partners

The week ahead
Global investors will have a variety of economic indicators to digest this week. Economists are hoping for a bounce in US durable goods orders. Fourth-quarter results will be watched with interest in the US and UK, while Japanese investors will be looking at industrial production numbers.
FTSE 100: 4515 from 4412
Not for the first time, Vodafone dominated the UK market last week, after finally bowing out of the race for AT&T Wireless. Investors applauded the move, confident that the UK telecoms titan was unequipped to handle the $41bn deal.
Elsewhere, corporate earnings provided the driving force. Record earnings from Royal Bank of Scotland, impressive numbers and upbeat guidance from BHP Billiton, and a leap for Reed Elsevier on Thursday all helped to push the FTSE 100 to its biggest one-day gain since October. Meanwhile, economic data helped to reinforce a strong start to the year for the consumer sector.
Retail sales rose 0.6% in January and a report from the British Bankers Association showed strong demand for mortgages. Inflation also increased in January, although at 1.4% it remains below targets.
FTSE Asia/Pacific ex Japan: 236.83 from 235.20
Upbeat economic news provided a welcome boost for Pacific-Asian markets last week. China’s rampant growth was rewarded when Standard & Poor’s upgraded the nation’s credit rating to BBB+ – two levels above investment grade – and said it may be lifted even further.
A decline in unemployment was well received in South Korea, while shares soared to a 22-month high on news of a free trade agreement with Chile that could increase annual exports by $220m by 2009.
In Hong Kong, anticipation of strong earnings helped the Hang Seng to rally early in the week, while IPO news added to the upside. Shares of Tom.com soared on plans for an IPO in the US that could raise up to $187m, while investors cheered reports that Dongfeng Motor has started preparing for an IPO that could raise up to $2bn.

Nikkei 225: 10721 from 10558
Japanese focus centred on GDP numbers last week, as investors were shown signs that the nation’s economic metabolism may finally be picking up. Japan’s economy grew 7% in the fourth quarter, its fastest rate in 13 years and far surpassing economists’ expectations.
Exporters remained vulnerable to the fluctuations of the yen against the US dollar, although automakers were given a slight reprieve on reports that Honda is planning a joint venture to produce aero engines in the US. Still, Mitsubishi Motors suffered amid news that it will endure a ¥10bn loss in profits.
Meanwhile, investors flocked to the IPO of Shinsei Bank, leaving analysts to question whether the huge demand for the stock would absorb funds from other market sectors.