Markets generally saw another good week, with small gains in Europe and the UK complemented by large gains in Asia, particularly China.

20 - 25 April 2008

Europe
European markets finished the week marginally higher, despite further write-downs by Swiss banking giant, Credit Suisse. This was overshadowed however by a strong set of results from Ericsson.

UK
Shares performed relatively well however the leading banks dragged the FTSE 100 lower by the end of the week. Royal Bank of Scotland’s announcement of a profit write-down and a Rights Issue was initially well-received by the markets, however uncertainty grew over whether the other major banks will follow suit.

US
The US bucked the general trend of rising prices this week and was the worst performing of the major regions. Technology shares performed well for most of the week, but these were wiped out as Microsoft reported lower profits and falling sales of its Windows products.

However, sentiment to the financials sector improved, as Merrill Lynch stated plans to maintain its dividend, while there were also gains for T Rowe Price and American Express.

Asia
Chinese shares surged more than 15 percent after the authorities cut stamp duty on share transactions. This comes after the Chinese stock market had fallen 50 percent from their peaks of late last year. Other Asian markets showed small positive gains, with Hong Kong up 5 percent and Japan gaining nearly 3 percent.

Bonds
US Treasuries saw little movement in the first half of the week, after last week’s significant rise in yields, however yields were pushed higher later in the week as durable goods and weekly jobless claims were deemed positive.

In Europe, two-year yields also rose over the week and UK Gilt yields moved higher over the week in line with other markets.

Economic News
News from Germany said its business climate index fell in March, suggesting the credit crisis and the euro's rise to a record this week are slowing economic growth in the region. Furthermore, a measure of French investor sentiment slipped to a 16-month low, reducing the chances the ECB will lift interest rates. However, bonds sold off as equity markets performed relatively well.

The UK economy grew at a rate of 0.4 percent in the first three months of the year, its weakest quarterly growth in three years. Lower interest rates are not passing through to borrowers however as mortgage providers continued to raise their mortgage rates, putting a further squeeze on consumers.

Finally, in Japan, it was announced that inflation had reached its highest levels for 10 years.

For further information, or to discuss how current global economic conditions are affecting your investments, please feel free to contact Craig Welsh at Spectrum IFA Group at craig.welsh@spectrum-ifa.com