Heavy profit-taking weighed on global equities last week as the US offloaded technology stocks, subduing sentiment worldwide in a correction widely regarded as necessary. The continuance of avian flu further upset markets in Asia, while the sliding US dollar remained a burden for exporters in Japan and Europe. US Dow Jones: 10496 from 10488 An assortment of economic numbers and profit-taking in the technology sector dragged the US market down last week. Amid concerns that prices have run ahead of business prospects, investors were content to offload technology stocks when earnings failed to match their bullish prospects, pushing all the major indices near their lowest levels of the year. Meanwhile, in the wake of the previous week’s disappointing 4% GDP forecast, the market remained cautious when evaluating last week’s economic data. The Institute for Supply Management’s services sector index powered above expectations, and factory orders exceeded forecasts. However, investors were reluctant to celebrate the good news as they nervously awaited employment numbers, although bullish comments from Federal Reserve governor Ben Bernanke left the market cautiously optimistic. TMT Nasdaq: 2020 from 2066 All eyes were on figures from Cisco Systems last week. However, numbers from the networking titan failed to impress technology investors, who focused on the downside and took profits following the company’s 85% run-up since early 2003. While profits were strong and forward guidance was positive, comments from Cisco CEO John Chambers highlighted that recovery in spending and hiring remains weak. The news unsettled the market, prompting a broader sector sell-off, which erased close to all of 2004’s gains. Other earnings results also encouraged investors to take profits, with current-quarter forecasts from telecom equipment maker Ciena adding to the gloom. However, the declines failed to upset analysts, who hinted that in light of the sector’s recent strength, such a correction was not only acceptable, but well overdue. Europe FTSE Eurotop 300 ex UK: 1050.94 from 1055.97 The focus was on earnings last week, as corporate reports struggled to impress the market. Weak earnings from automakers gave grounds for profit-taking – lacklustre sales in France and uninspiring revenues from Volvo were among the lowlights. With numbers from the telecoms sector also failing to impress, investors were forced to wait for Ericsson’s first quarterly profit in nearly three years to brighten the mood significantly. Meanwhile, the recent burst of merger speculation continued as drug maker Aventis reportedly drew up a list of potential partners following Sanofi-Synthelabo’s hostile bid the previous week. There were also rumours of consolidation in the banking sector, boosting financials amid reports that UK banks Barclays and Royal Bank of Scotland are in the running to merge with Germany’s HVB. The week ahead US economic progress will remain in focus as investors digest last week’s unemployment data in the hope that the laggard of the US economy is gaining strength. Alan Greenspan’s testimony will give further insight into the US economy, while reports on GDP, and the Bank of England’s inflation report, will provide food for thought on this side of the Atlantic. UK FTSE 100: 4403 from 4391 Volatility beset UK trading last week as investors had a variety of market-moving news to digest. Anticipation ahead of the Monetary Policy Committee’s decision on interest rates influenced sentiment for much of the week, but the 0.25% increase to 4% came as no surprise and made little impact on trading. Nevertheless, the rise was an encouraging sign for economic development. Elsewhere, reports of Vodafone’s potential bid for US rival AT&T Wireless failed to impress, sending shares of the UK titan downwards. Fellow UK operator mmO2 benefited as investors switched from Vodafone, and rallied further after reporting increased fourth-quarter revenues and a rise in customers. Meanwhile, it was a good week for troubled engineering group Invensys as speculation mounted concerning the company’s restructuring plans. The stock soared on the release of its £2.7bn refinancing package, the largest seen on the UK market for years. Asia pacific FTSE Asia/Pacific ex Japan: 223.38 from 225.18 Asian markets lacked a clear trend last week, as investors remained hesitant about the prospects for the region’s economies following the outbreak of avian flu. Airlines suffered on fears of restricted travel to the region and bird-related stocks continued to feel the brunt of the downside as the death toll from the virus rose. A US embargo on poultry imports from the region and the European Union’s extension of its existing ban did little to alleviate the strain. On a more positive note, a statement from Indian finance minister Jaswant Singh indicated that India’s economy could expand by 8% this fiscal year, a figure likely to make it the world’s fastest-growing economy after China. Japan Nikkei 225: 10461 from 10784 A poor performance by technology stocks kept the Japanese market below par last week – a drawback compounded by the continued rise of the US dollar. While earnings reports were largely upbeat, their failure to match the market’s bullish hopes was met with heavy selling. Uninspiring earnings and disappointing forward guidance from bellwethers Sharp and Canon gave investors further reason to lock in profits, while reports indicating a bleak future for digital cameras exacerbated the downside. As ever, the strengthening yen weighed heavily on market sentiment, particularly ahead of the weekend’s G7 meeting – widely expected to denounce central bank intervention to curb the fall of the greenback.