WEEKLY WRAP
Morning folks. Here’s your Week Just Gone, Week To Come and What The Papers Said bulletin.

THE WEEK JUST GONE
Just a week after record highs in equity markets investors decided to celebrate the anniversary of the stock market crash of 1987 by knocking 360 points off the Dow on Friday. Rising oil prices, some shocking company results and further concerns over a slump in both the US and UK housing markets sent traders rushing for cover..

America was worst hit, with the Dow –4.1% and S&P –3.9%, but other markets fared little better with FTSE and Nikkei –3.0% and the Dax –2.0%

On Monday a group of US banks announced their intention to create a $100 billion fund to buy up the assets of troubled investment funds. Rather than steady the market, as planned, it unsettled investors, reminding them that the problem hadn’t gone away at all.

Good results from Intel, IBM, JP Morgan Chase, Coca Cola, Nokia and Google pleased the market, but greater attention was paid to some shockers from Philips, DSG, Washington Mutual, Bank of America and, in particular, telecommunications giant, Ericsson, whose shares fell 25% after a severe profit warning.

Construction group, McAlpine confirmed it had received a bid approach from Carillion and Pearl increased its offer for Resolution to 691p a share.

Increasing speculation that the US will cut interest rates later this month drove the Dollar to a new record low against a basket of currencies; EUR/USD hit a new high of $1.4319 and GBP/USD closed at $2.0510. Despite this the International Monetary Fund still reckons the Dollar’s overvalued.

Gold reached a new 28-year high, topping $770 before dropping to finish the week $14 higher at $761.Increasing tension between Turkey and Northern Iraq continued to push oil higher, hitting $90 before ending at $88.60. Brent Crude finished the week $3.3 higher at $83.80.

UK government bonds gained 1.2% as, once again, investors sought the comfort of less riskier investments.

THE WEEK TO COME
Traders will start the week focussing on comments from the weekend G7 meeting and wondering if last week’s sell-off was a small correction to a bull market or something a bit more serious. Expect markets to start lower in reaction to Friday’s late sell off in the US. The week is fairly light on meaningful economic numbers but watch out for US Home Sales on Wednesday and Thursday. There are plenty of company earnings reports to digest including oil giants BP and Shell and investment bank Merrill Lynch.

Monday
No economic indicators today.
Results
UK: Pearson trading statement
US: American Express, Apple, Halliburton, Merck, Schering Plough and Texas Instruments.

Tuesday
Economic indicators
UK: 11.00 CBI Industrial Trends survey
EU: 07.45 French Consumer Spending, 11.00 EU Industrial Orders
Results
UK: BP quarterly results, BHP Billiton and Carpetright trading statements and Prudential new business figure.
US: AT&T, Dupont, United Parcel Service, Burlington Northern and Unisys.

Wednesday
Economic indicators
EU: 09.00 Manufacturing and Services PMI, Belgian BNB Business Confidence
US: 15.00 Existing Home Sales
Results
UK: Home Retail Group interims, Glaxo and Reckitt Benkiser quarterly, Kazakhmys Q3 production
US: Boeing, General Dynamics, Merrill Lynch, Symantec and Silicon Laboratories

Thursday
Economic indicators
EU: 07.45 French INSEE Business Sentiment, 09.00 German IFO Business Climate
US: 13.30 Durable Goods Orders and Weekly Jobless, 15.00 New Home Sales
Results
IRE: Élan
UK: Royal Dutch Shell quarterly, Aviva interims, Reuters trading, Lonmin production, BHP Billiton, Go Ahead and Thorntons agm
US: Bristol Myers, Daimler, Motorola and Raytheon

Friday
Economic indicators
EU: 09.00 M3 Money Supply
US: 15.00 University of Michigan Confidence (final)
Results
UK: Legal & General new business
US: Baker Hughes

WHAT THE PAPERS SAID

The press was predictably alarmist after Friday’s sell off in the US. The Telegraph warns of a repeat of 1987’s Black Monday with FTSE falling by at least 100 points. The Observer focuses on the oil price, claiming that a price fast approaching $100 will slow worldwide growth over the next 12 months.

“Don’t worry,” says David Smith in the Sunday Times. He quotes the Ernst & Young Item Club’s new forecast for growth in the UK. They reckon that growth will slip to 2.1% next year, but that there won’t be a serious slowdown in growth.

The US vetoed attempts by the G7 to warn that the weakening dollar was causing problems for Europe. Instead, says The Telegraph, members decided to warn the Chinese to allow their currency to rise to a more realistic level.

The Sunday Times gives an update on the Resolution bid story; it reports that Standard Life and Swiss Re will launch a bid worth between 730-740p per share. The company had already immediately dismissed Pearl’s increased bid of 691p on Friday.

Scottish & Newcastle are sounding out white knights (good guys) to help them fend off the unwelcome attentions of Carlsberg and Heineken. Any talks are at an early stage, says the Telegraph, and are based on the assumption that a bid will be forthcoming.
The Sunday Times takes a different view, suggesting that Scottish & Newcastle might sell their Finnish holding company, Hartwell, that holds their 50% share in BBH, the Russian beer business.

RTE Business said Ryanair has reported Aer Lingus to the Irish FSA, claiming that it had briefed the government, a 25% shareholder, before it released announcements to the Stock Exchange.