Apple caught eye of investors last week, hitting a record high and helping lift America's S&P 500 to a new peak.
The company has nearly doubled in value since a low of $55 in April last year, adding some $300bn to its market value as investors bet on the success of its new products - including the forthcoming iPhone 6 and its rumoured iWatch. The company was also helped by positive comments from activist investor Carl Icahn, who bought Apple stock last autumn, and on Friday its shares reached the dizzy heights of $101.24 despite worries about supply problems for the new iPhone.
Overall, despite a rather downbeat performance on Friday, global markets spent the week shrugging off continuing tensions between Russia and Ukraine and worries about a rise in interest rates.
As well as the S&P hitting a high of 1994, the FTSE 100 finished the week 86 points higher at 6775.25 despite slipping 2.41 points on Friday. Volumes were fairly light as the summer lull continued, especially as the UK bank holiday approached. Michael Hewson at CMC Markets warned:
It is hard to escape the conclusion that despite another record high for the S&P500 the rally feels forced, as the psychologically important 2,000 level acts like a flame attracting a moth.
The concern is that while this particular US market continues to push higher, its sibling markets remain short of their previous record highs.
And with a Russian convoy entering Ukraine and ratcheting up the dispute between the two countries, as well as continuing violence in Gaza and Syria, investors remained wary of the geopolitical outlook.
Traders also spent the week contemplating a rise in interest rates, with two Bank of England members unexpectedly voting for an increase in UK borrowing costs at this month's meeting. The US Federal Reserve's latest minutes also seemed to suggest an earlier than expected rise may be on the cards, and Fed chair Janet Yellen's speech at the Jackson Hole central bank meeting did not dispel that idea. The week's US data - including a sharp drop in jobless claims and existing home sales at a 10 month high - also pointed to a recovering economy and therefore less need for central bank stimulus measures.
There was also a spate of takeover speculation. Vodafone rose 3.25p to 205.85p on talk of renewed interest from US rival AT&T, while AstraZeneca added 6.5p to £44.18. Next week rejected suitor Pfizer could return with a new offer if AstraZeneca's board agrees, although analysts were sceptical of the idea. Savvas Neophytou at Panmure Gordon said:
The prospects of renewed hostilities next week are remote, but AstraZeneca remains an attractive bid candidate which may attract interest after 26 November [when Pfizer could return without AstraZeneca's recommendation].
Struggling supermarket Tesco had come under pressure on talk that new chief executive Dave Lewis should cut its dividend, but hopes of an improvement in its market share performance in the latest Kantar Worldpanel figures next week helped limit the damage, and it climbed 2.5p to 248p.
BHP Billiton, down 27p at £19.44, unveiled a long rumoured demerger during the week but disappointed the market with worse than expected profits and the lack of a cash return to shareholders.
The prospect of an interest rate rise was likely to hit high street retailers, according to analysts at Barclays, who turned negative on the sector. They said:
Tightening monetary policy in the UK will likely pressure the finances of UK households, forcing a reconsideration of spending habits after five years of near-zero interest rates. Historically, in an environment of interest rate increases the general retail stocks have underperformed.
Halfords lost 7.2p to 488.5p as Barclays cut its recommendation from equal weight to underweight and its target price from 460p to 400p.
Finally, the London Stock Exchange added 24p to £20.29 despite launching a £938m cash call at a deeply discounted £12.95 a share to help fund its $2.7bn purchase of US group Frank Russell. The exchange also reported a 26% rise in first quarter profit to £129.8m.
