Market Report: Apple's iPad puts ARM under the spotlight

The semiconductors group ARM was in focus last night, with traders buying in amid optimism about Apple's latest offering.

The stock was marked up by 5.4p to 246.3p after ARM and Germany's Infineon emerged as the main suppliers for the iPad, which got off to a flying start on Saturday. The Californian tech giant said it had shifted more than 300,000 units on the day of the launch, driving hopes of royalties for ARM. On RBS's numbers, the company stands to collect about 35 cents per iPad. The 3G device, which will be out soon to supplement the Wi-Fi version, is slated to bring in about 45 cents per unit. "We currently assume that 16 million ARM-based internet tablets and electronic readers will ship this year, growing to 23 million next year," RBS said, sticking to its "hold" view and 245p target price for the stock.

Overall, sentiment was strong as dealers returned from the long Easter weekend, with the FTSE 100 firming up by 35.46 points to 5780.35 and the FTSE 250 rising by 124.49 points to 10434.01. Besides the positive read-across from Friday's US unemployment report, the blue-chip index was driven up by commodity issues, which built on a renewal of recovery hopes.

Though initially nervous about the impact of Australia's decision to raise interest rates, traders bought in amid growing optimism about the prospect of continued growth in the world's biggest economies.

Notably, confirmation that Britain's general election will be held on 6 May had a muted effect, with Goldman Sachs strategists pointing out that, though this time there was a risk of a hung Parliament and the attendant uncertainty on the deficit reduction front, equities "had shown no clear pattern around elections since 1970". "1974 was the last time the UK had a minority government and that was unequivocally negative for equities," they said, noting that, while the economy was "in a much worse position then", UK stocks underperformed their American peers by more than 20 per cent in the month after the result.

The Eurasian Natural Resources Corporation was among the strongest of the miners, adding 41p to 1,266p as metals prices ticked up. Kazakhmys rose 48p to 1,630p and Rio Tinto gained 55.5p to close at 4,062p. Oil issues also found favour, with BP rising by 15p to 646.3p and BG gaining 18.5p to 1,185p. The exploration and production group Tullow Oil was 31p higher at 1,313p.

Also on the upside, the insurance group Admiral swung to a lifetime high of 1,403p before closing up 35p at 1,367p amid hopes of gains in market share. Traders pinned the hopes on a recent management meeting in the City, with investors reporting confidence in Admiral's strategy and its ability to steal a march on its rivals. In the wider insurance sector, Legal & General was 2p ahead at 90.75p, while Prudential added 8.5p to close at 577p.

The defence group BAE Systems missed out on last night's rally, retreating by 5p to 368.8p despite recent confirmation of Oman's interest in buying the Eurofighter aircraft, which is partly built by BAE, from the UK. A spike in the market's appetite for risk and some negative comment from Goldman Sachs were blamed for the weakness, with the broker saying that while the news may be positive, BAE was "still likely to underperform in 2010".

"We still believe BAE's earnings will peak in 2010 and then decline for a number of years," Goldman explained, reiterating its "conviction sell" view. "We are increasingly concerned by the outlook for defence spending in the US and UK (68 per cent of BAE's 2009 sales) and about deteriorating terms of trade in US defence."

Elsewhere, Panmure Gordon aided the engineering group Cookson, which rose by 13p to 586.5p after the broker switched its stance from "buy" to "hold" in an industrial engineering round-up. The broker was also positive about a host of Cookson's peers, including Bodycote, which gained 2.2p to 215p. Arguing that the "industrial bull market is switched on", the broker said the next step up for the sector had been "green-lighted" by the recent raft of positive manufacturing data.

"[The data] removes a major roadblock, raises visibility and helps to dissipate the risk of a secondary dip," Panmure explained. "It suggests renewed confidence, a return in export orders and a ramp up in industrial output. Following the six-year high in the US ISM manufacturing index, the standouts include a sharp improvement in export orders in Asia and the sharp uptick in PMI manufacturing data for the long depressed European heartland."

Panmure also boosted Asos, the online fashion retailer, which closed 21p higher at 538.5p after the broker revised its target price for the stock from 515p to 607p.

Weighing in ahead of the company's full-year trading update later this month, Panmure said its estimates anticipated 44 per cent compound growth in international revenues between 2009 and 2013.

"Our forecast is conservative, we think, in that it assumes a drop in the international revenue growth rate from 86 per cent in 2010 (current year ending March) to 38 per cent in 2011," Panmure explained, repeating its "buy" view on Asos shares.

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