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Investment analysis

Events in the US dictated last week, with the much feared August 14 deadline for chief executives to certify financial statements passing by with little more than a whimper. Relieved global markets, in the main, gained ground over another volatile five days, with the FTSE World index rising by 1.6 per cent.

In the US, the airline industry was rocked when US Airways, the seventh-biggest airline in the world, filed for bankruptcy. Much of the gains from the previous week, which were inspired by talks of a further interest rate cut, were lost when the Fed left rates on hold on Tuesday. The Fed did admit signs of weakness in the economy and hinted of a rate cut later.

On Wednesday, bargain-hunters pushed stock prices higher, particularly the techs, and the coming and going of the deadline on Thursday without too many big surprises saw investors push markets up further. The one big casualty was AOL, which admitted further accounting irregularities.

The latest economic news showed a dip in consumer confidence and homebuilding activity falling for the second consecutive month. The Dow, S&P Composite and Nasdaq gained 0.4 per cent, 2.2 per cent and 6.3 per cent respectively.

European equities bucked the trend. French media group Vivendi had a horrendous five days, with its shares falling by 45 per cent. On Wednesday, the group announced a huge second-quarter loss and a massive refinancing requirement, prompting rating agency S&P to downgrade its debt rating to junk status. Media stocks across the Continent were pulled back as the FTSE Eurotop 300 shed 0.4 per cent. France&#39s CAC40 and Germany&#39s Dax lost 2.2 per cent and 2 per cent respectively.

In the UK, a strong end to the week was inspired by events from across the Atlantic, with the FTSE 100 gaining 3.7 per cent on Thursday.

Good performance from the property sector and a rebound at the end of the week saw Hong Kong&#39s Hang Seng index post a gain of 2.5 per cent. China Mobile and Cathay Pacific were the leading stocks. South Korea&#39s composite index, boosted by strong performance from telecoms and Hyundai, the region&#39s biggest carmaker, gained 3.7 per cent.


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