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Investment Analysis

Most of the world&#39s major equity markets ended last week higher, with

stocks in the US rallying on Thursday and Friday following stronger than

expected results from Yahoo, Motorola and Microsoft.

Technology stocks rallied, pushing the Nasdaq to its biggest one-day gain

for nearly three months while the broader market also put in a strong

performance.

US economic data was mixed, with retail sales showing only a modest

increase although those who are concerned about inflation had their fears

put at ease with the latest producer price index figures falling at the

fastest monthly rate for more than two years.

Having fallen for seven straight sessions, the UK&#39s FTSE 100 recovered its

composure on Thursday and Friday, with a strong showing from telecoms and

pharmaceuticals helping the index end the week just over 1 per cent higher.

In spite of the rally, the index still remains some 20 per cent below its

all-time high. Technology stocks bounced off their recent lows helping the

beleaguered Techmark 100 to a gain of 3.1 per cent.

In Europe and Japan, equity markets ended more or less where they started

although the emerging markets sector continued to suffer from continuing

concerns over the Argentine debt crisis.

This week sees a spate of second quarter earnings announcements from both

sides of the Atlantic and to say that the numbers are expected to be

horrible would be something of an understatement.

However, some may draw comfort from the fact that this may mark the low

point in the profits&#39 cycle.

Having endured seven consecutive losing sessions, the FTSE 100 rallied on

the back of a stronger Wall Street on Thursday and Friday to leave the

index 1.1 per cent higher. However, mid and small cap stocks remained more

subdued, with the FTSE 250 gaining 0.4 per cent while the small cap index

fell 0.7 per cent.

It was a somewhat mixed week for European equity markets, with Kuoni&#39s

profit warning on Friday confirming that the slowdown was not confined to

the new economy while Epcos&#39 warning on earnings provided evidence of a

further slowdown in the electronics sector.

Following a subdued start, it turned out to be a good week on Wall Street,

with all three main indices closing higher. Leading the way was the Nasdaq

which rose 4.9 per cent. Gains were not limited to technology stocks, with

the broader-based S&P 500 up by 2.1 per cent while the Dow ended up by 2.8

per cent higher.

Shares in Tokyo rose following a battering although the rally remained

unconvincing. The Nikkei 225 rose 0.4 per cent. With little in the way of

economic data over the short term, investors have turned their attention to

upper house elections at the end of the month for signs of structural

economic reform.

In spite of a rally on Wall Street and a stronger technology sector, it

was a poor week for most of Asia&#39s equity markets. The Hang Seng fell 3 per

cent while the Taiwan stockmarket fell to its lowest level since 1993 after

the country&#39s leading economic research institute cut its forecast for

economic growth.

It was a generally positive week for international stockmarkets, with the

US and, in particular, the technology sector leading the way. But emerging

markets continued to suffer following the Argentine debt crises, with the

sector as a whole falling 4 per cent, leaving it 7.6 per cent lower since

the start of the year.

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