The week ahead
Some European heavyweight companies reveal their results this week, including Nokia, Philips Electronics and Carrefour. They will be joined by US chip maker Intel. On Tuesday, there will be a flurry of excitement over the latest business update from Marks & Spencer, which comes in between Lufthansa on Monday and Legal & General on Thursday.
Nasdaq: 1949 from 1942
Technology stocks were given a potential boost at the end of last week when IBM chief executive said that corporate spending on IT would increase in 2005. Sam Palmisano was reported as saying capital spending would grow 6-7% in 2004 and would increase again next year. Despite a rally on Wednesday, the Nasdaq was down on the week by 22.51 points by the end of trading on Thursday and was predicted to fall on Friday after the lower-than-expected US jobs data. This followed the first fall in the Nasdaq for eight sessions as it closed down 1.14% on Thursday. EBay shares fell 1.7% in trading on Thursday after it announced it had closed its tender offer for another 2.7% of the shareholding in South Korea’s Internet Auction. It now owns 99.7% of the company. Dow Jones: 10125 from 10193 The US ended the week in disappointing fashion as businesses added only 96,000 jobs to payrolls in September, way below the 148,000 expected and predicted to lead to a fall in Friday trading. This followed a boost on Thursday when oil prices dipped back below $53 a barrel and General Electric reported earnings in line with Wall Street’s expectations. Generally, it was a struggle for US markets last week despite a rally on Wednesday afternoon. Continued high oil prices and downbeat news on pharmaceuticals and retailers combined with a slight decline in the Institute of Supply Management’s index of service-sector activity in September to stall a recovery before Friday’s data on jobs. While Wal-Mart reported a gain of only 2.4% in same-store sales, there were profit warnings from Knight Trading and Zoran Corp. EUROPE
FTSE Europe ex UK: 1062.52 from 1049.28
Europe ended the week in tentative mood, but markets still traded around five-month highs. European shares eased at the end of the week because of high oil prices and weaker-than-expected payroll figures. The travel and leisure sector was hit by both the oil price and the bomb attacks in Egypt. Lufthansa dropped 2.6%, BA fell 1.4% and Air France-KLM slid 1%; Accor fell 1.3% and Hilton dropped 0.6%. Among the better-performing stocks were Austria’s OMV Group, which rose 4% on Wednesday and 2.5% on Thursday. Statoil and Total also benefited from the high energy prices. Swatch Group and Richemont benefited from strong sales of Swiss watches in recent months. UK
FTSE 100: 4699 from 4660
The UK stock market had a memorable week as the FTSE 100 broke through the 4700 barrier and reached a 27-month high. It is now clear of the top end of the trading range of 4600 with the gas and oil sector comprising a significant proportion of the rise. BP, for example, reached its highest level since July 2002 last week, while BG Group was at its highest price since flotation in 1986. Energy stocks were also attributed to be the main driver behind a rise in earnings per share growth forecasts for the FTSE 100 by 1.7%. A belief that interest rates, which were held at 4.75% last week, are near their peak, and bid speculation as a result of improving corporate profits, have boosted the UK. Matalan, JJB Sports and Woolworths all benefited from bid speculation. FTSE Asia/Pacific ex Japan:
231.46 from 226.40
Asian markets ended the week weaker, partly over concerns about the impact of high oil prices, but led by technology stocks. Markets in South Korea, Australia and Hong Kong all fell, while Taiwan and Singapore were flat on Friday. Samsung’s third-quarter operating profit fell about 10% short of market forecasts because of weak sales of flat screens. Its price fell 2.4% in Friday trading as a result, despite Samsung buying back 200,000 shares. PetroChina was boosted by the oil price, however, and rose 2.4% on Thursday. Taiwan Semiconductor Manufacturing fell 3.8% on Friday after its sales in September declined for the first time in seven months. Nikkei 225: 11349 from 10985
Share prices in Japan fell at the end of last week after its recent strong performance continued into the first three days. Technology stocks in Japan were not helped by the fall in Nasdaq on Thursday, and airline stocks were hit by the high oil price. The market was also hit by Japanese machinery orders data failing to deliver the expected strong rebound. Banking stocks also sold off on news that the Japanese authorities had begun a criminal investigation into UFJ Holdings’ naming unit. On a positive note, Seven-Eleven Japan reported a 7.6% increase in first-half net profits. The Nikkei 225 had enjoyed positive returns for five consecutive days, the longest run in seven months.