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Investment analysis

It was a better week for most of the world&#39s equity markets and although investors remained concerned over the reliability of a number of corporate earnings numbers, more positive news on the health of the US economy helped pull most indices higher.

In the US, unemployment and business inventory numbers were both better than expected while the latest retail sales figures showed their biggest rise for two years (excluding cars). However, on Friday, investors were left disappointed by the University of Michigan Survey reporting a bigger than expected drop in consumer sentiment. Although the latter resulted in prices falling on Friday, it was still a positive week for stocks with the Dow Jones rising by 1.6 per cent while the S&P 500 gained 0.7 per cent. However, technology stocks continued their recent decline, leaving the Nasdaq 1.1 per cent lower.

The UK market was given a shock at the start of the week following the news that inflation had pushed above the Government&#39s 2.5 per cent ceiling in January.

But economists expect the figure to come down this month while investors were given further reassurance over the health of the economy with the latest average earnings statistics which showed average earnings falling below 4 per cent, their sharpest monthly fall for over eight years.

Many telecom stocks again took a hammering, pushing the Techmark 100 down by 0.8 per cent but the main indices ended higher, with the FTSE 100 rising by1 per cent, the 250 by 0.7 per cent and the Hoare Govett Smaller Companies index 0.6 per cent.

Elsewhere, most equity markets ended the week in positive territory with the FTSE eurotop 300 rising 1.9 per cent while Japan&#39s Nikkei 225 regained the 10,000 level following a gain of 3.7 per cent.

However, it was the other Far Eastern markets which again produced the best returns, with Hong Kong jumping by 4.2 per cent while in Korea stocks ended the week 6 per cent higher.


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