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Investment analysis

It was a volatile and mixed week for global markets. The FTSE world index 1.3 per cent lower, predominantly on the back of corporate concerns in the US.

There was a batch of encouraging US economic data – durable goods orders fell by 0.6 per cent, much less than the forecast 2.6 per cent, sales of new single family homes rose to record levels in August and unemployment fell. However corporate news and continued uncertainty surrounding Iraq dragged the Dow and Nasdaq to fresh fourand six-year lows. Walmart&#39s announcement that September sales would be at the lower end of expectations prompted a sell-off in retailers. Fibre-optics company JDS Uniphase joined a long list of companies warning of a fall in third-quarter profits and shares in Microsoft lost ground after it offered a bleak view of business conditions in Europe.

It was mixed week in Europe, with the FTSE Eurotop 300 & France&#39s CAC40 gaining 1.2 per cent and 2.1 per cent while the Dax and Italy&#39s Comit 30 shed 4.8 per cent and 0.7 per cent. French telecom equipment-maker Alcatel performed strongly after announcing it had sold its stake in Thales, the defence electronics group, as did TV Group Canal Plus after it sold its technology unit.

The insurance sector staged a comeback last week, led by Axa. German business confidence figures from the Ifo institute provided some support although the fall was less than expected and Italian data showed corporate confidence picking up for the first time since May.

In the UK an end of week rally covered up sharp falls earlier on which had seen the FTSE 100 hit a new six-year low midweek. But the index ended with a five-day gain of 1.2 per cent, bolstered by the upward revision of GDP year on year and evidence of strong switching from gilts into front-line equities via program trading. It was a different story for UK smaller companies as a list of profit warnings and bearish statements saw the FTSE Small Cap index decline by 2.1 per cent.

In Hong Kong, the Hang Seng index broke a six-day losing streak on Friday, with strong performance coming from the property sector, to end the week down just 0.4 per cent.


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