World roundup

The week ahead
Alan Greenspan’s comments at the American Bankers’ Convention will be the main focus for global markets this week. Meanwhile, in Europe, interest rates are not expected to change after the respective meetings of the Bank of England and the European Central Bank on Thursday. Unemployment will also be in focus as the US and Germany release September’s figures.

TMT
Nasdaq: 1870 from 1879
Technology stocks enjoyed a midweek bounce, having been out of favour throughout much of the summer, when fund managers made quarter-end adjustments to their portfolios. A wave of buying across the internet sector was sparked when US-based travel and property services group Cendant agreed to buy travel web site Orbitz.

However, gains were tempered by a profit warning from Cypress Semiconductors on Tuesday, and an announcement by Dutch chip equipment maker ASML on Wednesday that it is taking a “more prudent position” on the fourth quarter.

News that global semiconductor sales rose by 1.1% in August, led by chips for personal computers and equipment for networking and telecoms, provided further stimulus. The Semiconductor Industry Association said that chip inventories appear to be declining.Source: Fund analysis company Forsyth PartnersDow Jones: 10077 from 10047 The US market was mixed last week as investors were concerned by crude oil prices setting new record levels, and money managers reshuffled their portfolios before the quarter-end. Investor sentiment was shattered on Thursday when pharmaceutical giant Merck withdrew its blockbuster arthritis drug Vioxx from the market after new data showed that it increased the risk of heart attacks. A spate of mixed economic data gave investors little guidance on the health of the US economy.

Jobless claims rose for the week while consumer spending was flat during August. However, the Chicago PMI showed that manufacturing in the midwest region rose in September, while the US GDP figure for Q2 was revised upwards to 3.3%.

EUROPE FTSE Eurotop 300 ex UK: 1043.87 from 1046.06
European bourses were depressed by a fresh burst in crude oil prices on concerns of further supply disruptions. A sell-off in the pharmaceutical sector also weighed heavily on markets after US drug giant Merck announced the withdrawal of its arthritis drug from the marketplace.

Adding to the gloom, financial sectors suffered as insurance stocks weighed up the costs of Hurricane Jeanne. On the upside, telecoms made progress after Morgan Stanley upgraded the European telecom sector to overweight and highlighted Deutsche Telekom and Telefonica as two of its preferred picks. Economic news was mixed in France, as consumer confidence rose markedly in September, while domestic unemployment increased by 9.9% in August. Meanwhile, inflation in the eurozone slowed to a five-month low of 2.3% for September.

UK
FTSE 100: 4660 from 4578
UK stocks were volatile last week, with concerns about the impact of record oil prices being reinforced by Chancellor Gordon Brown’s warning that the global economic recovery is “uneven and still fragile” in the wake of high oil prices. Merck’s troubles ensured that drug makers were in focus on this side of the Atlantic. However, the market was later boosted by news that UK pharmaceutical company Warner Chilcott had received a second bid approach.

Mobile phone operator mmo2’s upbeat earnings forecast spurred on the rest of the telecom sector. Rival Vodafone also made headway when JP Morgan added the company to its preferred list. Virgin Mobile, on the other hand, disappointed when its earnings guidance for 2005 failed to meet analysts’ expectations. Elsewhere, Mexico’s Cemex, the world’s third-largest cement producer, agreed to pay £2.3bn for British concrete firm RMC.

FTSE Asia/Pacific ex Japan:
221.90 from 222.66
The continued rise of oil prices weighed on Asian Pacific markets during the first half of the week. However, these losses were reversed thanks to solid gains in the technology sector. The Australian market hit record highs, supported by news that mining company BHP Billiton had won a $3.2bn contract to supply China with additional iron ore. The deal also underlined the ongoing Chinese demand for natural resources. Elsewhere, Taiwan’s central bank raised interest rates by 25bps for the first time in four years, in order to quell inflationary pressure in Asia’s sixth-biggest economy.

Nikkei 225: 10985 from 10895
The Japanese market snapped a nine-day losing streak on Wednesday, prompted by a retreat in oil prices and an upbeat revision of US GDP figures for Q2. A raft of Japanese economic data released last week gave a mixed picture of the health of the domestic economy. Investor confidence was initially hit by news that retail sales fell marginally more than forecast in August, affected by adverse weather conditions.

However, the market was given a lift when the Bank of Japan’s closely watched Tankan business sentiment survey showed that confidence among large manufacturers was stronger than expected. In addition, domestic industrial production rose in August for the first time since May, although it fell short of targets.