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Investment analysis

Uncertainty dominated the financial markets last week, with deepening tension in the Middle East pushing crude oil futures prices to a six-month high and sparking a sell-off in most equity markets. The representative FTSE World index shed 0.9 per cent.

In the US, economic data was mixed, jobless figures came in over expectations, increasing by 64,000, with further pressure being added by data showing new orders for US factory goods easing in February. However, there were positive signs from the payroll report which showed 58,000 jobs being created, the first increase in seven months, and earlier in the week from the ISM index of manufacturing activity, which registered another rise.

Although the number of profit warnings in the US are down by 42 per cent on this time last year, jittery markets were hit last week with warnings from high-profile companies. The S&P 500, Dow Jones and Nasdaq ended 1.2 per cent, 2 per cent and 5 per cent lower respectively.

European equities fell despite further evidence of manufacturing expansion. The eurozone purchasing managers&#39 index rose to over 50, its fifth successive increase, but corporate concerns saw the FTSE Eurotop 300 lose 1.7 per cent.

The two biggest bourses, France&#39s CAC40 & Germany&#39s Dax, had a tough week, down by 2.6 per cent and 3.7 per cent respectively. The German banking sector was hit late in the week on debt exposure fears after the collapse of media group Kirch.

UK and Eurozone interest rates were, as anticipated, left unchanged for the fifth consecutive month. The FTSE 100, which traded in a very tight range, ended the shortened bank holiday week down by 0.7 per cent. Small and mid-cap indices were little unchanged while the Techmark 100 lost 2.5 per cent.

Two strong days in Japan saw the Nikkei 225 gain 2.8 per cent last week. On Tuesday, exporters were driven forward following the upbeat report on US manufacturing, Sony gaining 3.4 per cent.

Elsewhere, Hong Kong&#39s Hang Seng index slipped back 1.8 per cent and in Jarkata the composite index closed at a 20-month high, making it Asia&#39s fourth best-performing market this year.


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