World roundup

The week ahead
There will be keen interest in third-quarter trading figures from Abbey National next Wednesday as Santander Central Hispano moves closer to takeover. GlaxoSmithKline and ICI report third-quarter earnings results on Thursday. On Tuesday, BAT announces third-quarter earnings and Friends Provident reveals new business figures.

Nasdaq: 1954 from 1912
Microsoft announced third-quarter profits growth from $2.6bn to $2.9bn because of a 12% increase in revenue, driven by strong demand for its core software products from businesses, as well as higher sales of personal computers and servers. But the share price fell 2% on Thursday because the inclusion of expenses for stock-based compensation led to confusion over how to compare the results against expectations. Google’s share price, however, rose 8% on Thursday with the news that its net income and revenue more than doubled in the third quarter. Since listing in mid-August, Google’s share price has risen by almost 90%. Amazon shares fell 8% after its outlook for 2005 came in below analysts’ forecasts. The Nasdaq rose to 1953.62 at the close on Thursday, helped also by strong results from eBay.

S&P 500: 1106 from 1108
While technology stocks in the US edged higher last week, boosted by positive results from eBay and Google, the Dow fell to a two-month low on Thursday having flirted with a new low for the year. The dollar also tumbled to an eight-month low against the euro and a four-month low against Japan’s yen.

The general US market was restrained by corporate earnings figures that failed to live up to expectations. Caterpillar beat
third-quarter expectations, but did not revise up its outlook for the last three months of the year, and Eli Lilly revealed lacklustre reports. Concerns continued about the impact of the investigation by New York attorney general Eliot Spitzer into the insurance industry.

Health insurance shares also suffered a sell-off after Cigna admitted it had received a subpoena.

FTSE Eurofirst 300 Eurozone: 1045.72 from 1041.73
Europe remained flat last week. The FTSE Eurofirst 300 index (which includes some UK companies) is stuck in a two-month trading range between 980 and 1020 points; it rose to 997.3 points from 992.06 at the end of Monday trading. Ericsson reported pre-tax profits for the third quarter more than six times higher than a year ago, but its share price fell 7.1% in early trading on Friday after the company warned that market growth would slow in 2005. Orders in the third quarter rose just 3% year-on-year, and fell 13% compared with the second quarter. Volvo rose 2.5% after it reported strong earnings and gave a bullish forecast for 2005. Concern continued about the impact on European insurers of the investigation by New York attorney general Eliot Spitzer.

FTSE 100: 4615 from 4623
The FTSE 100 index nudged higher in trading on Friday, but the market could not shake off its caution, particularly about prospects for economic growth. During Thursday trading, the FTSE fell below the resistance point of 4600, but by Friday lunchtime the market was flat at 4626.9 points compared with 4626.6 at the end of Monday trading.

Firefighting equipment maker Kidde was the most notable performer as it rallied 38% on Thursday and Friday, after it said it had rejected a takeover approach from US conglomerate United Technologies.

UK economic growth slowed in the third quarter. GDP increased by 0.4% according to provisional estimates, compared with 0.7% and 0.9% in the first two quarters. The slowdown was attributed to a 1.1% decline in industrial production. In contrast, the service sector grew 0.8%.

FTSE Asia/Pacific ex Japan:
225.72 from 226.77
Asian markets edged higher on Friday because of positive earnings in the technology sector and news of continued strong economic growth in China. While China revealed that economic growth slowed for the third quarter in a row, it still reached 9.1% compared with 9.8% and 9.6% in the first and second quarters. Annual price inflation also eased to 5.2% in September. The news particularly benefited companies doing business with China, such as Singapore’s Neptune Orient Lines whose share price rose 1.38% on Friday. While the MSCI Asia Pacific ex Japan index rose 0.16%, the technology sector gained 1.03%; Samsung Electronics rose 1.98%. For most of the week, Asian stockmarkets were preoccupied by movements in the oil price and US corporate earnings.

Nikkei 225: 10857 from 10983
Japan rose by 0.63 % on Friday as investors were relieved by only a small slowdown in the Chinese economy. The market was also helped by gains by the Nasdaq, which encouraged investors to buy local
technology companies that have fallen recently, such as NEC

This followed a three-week low for the Nikkei at the end of Thursday trading. Indeed, until Friday, it had risen only once in the past 10 sessions. The Chinese economic data reversed the decline in steel, shipping and other China-related stocks. Nippon Steel rose 3.73% to ¥250, which halted a downward slide since the stock hit a four-and-a-half-year high of ¥271 on October 12. JFE Holdings rose 2.89% on Friday. Nevertheless, most of the week was marked by caution about the impact of the strong yen against the dollar, high oil prices and uncertainty about the US presidential election.