Market Report: Intel on Japan helps reassure Arm investors

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The Independent Online

Investors worried about the impact of the recent tragedy in Japan on the technology sector reacted with relief yesterday, as encouraging news from across the Atlantic helped Arm Holdings take the top spot on the blue-chip index.

The Cambridge-based group was driven forwards 32.5p to 608p, after the latest figures from Intel gave the chip maker a massive boost. The US giant, which is considered a bellwether for the sector, announced record results late on Tuesday, including a rise in profits of nearly 30 per cent, while it also said its production had not been significantly affected by last month's tsunami and earthquake in Japan.

Nick James, an analyst at Numis Securities, said the comments came as a relief, noting that "people were nervous, particularly about the semiconductors, because of the potential for supply constraints from Japan".

The analyst said further good news came from Intel's bullish remarks on the PC market, which Arm is set to gain exposure to given the fact that Microsoft's next version of Windows will be able to run on its technology.

Arm was also assisted by rising hopes ahead of Apple's latest figures, which were set to be released in the US late last night after the bell. The iPad 2 is one of the devices Arm's technology can be found in, but one trader warned that – despite there being "no reason not to be optimistic" over Apple's numbers – it was questionable "whether they will be great enough to match expectations".

With IBM issuing good results as well, technology groups globally were on the move up, including Imagination Technologies on the mid-tier index which climbed 23.1p to 476.4p.

Results from elsewhere provided boosts for other groups on the top-tier index as well, including Rexam which shot forward 4.5p to 381p after analysts pointed to Crown Holdings' latest update.

The US food-packaging manufacturer's profit over the first three months may have retreated over 60 per cent, but Seymour Pierce said the strength of its global beverage can sales unit "bodes well for Rexam" ahead of its results next month.

Overall, the FTSE 100 surged 125.39 points to 6,022.26, with only seven stocks left in the red. The miners enjoyed a strong session, including Xstrata which shrugged off the fact it was turning ex-dividend to power up 71.5p to 1,530p. JP Morgan Cazenove played its part, changing its recommendation to "overweight" ahead of the flotation of the commodities trader Glencore next month.

Pointing to public comments from the groups' chief executives recently about a potential merger, the broker said it was "no wonder Xstrata is outperforming its peer group at the moment" and predicted its impressive performance would continue.

Elsewhere in the sector, the emergence of takeover speculation around Ferrexpo pushed it up 25p to 464p. According to the chitter-chatter, which was played down by traders, the group could be about to receive a potential approach of between 600p and 700p a share, with market gossips suggesting Vale, the world's largest iron ore producer, and Rio Tinto, 136p better off at 4,366.5p, as two of the names possibly interested.

The housebuilders were on the rise on the FTSE 250 after HSBC expressed its "new-found optimism" over the outlook for new-build properties despite predicting house prices in the wider market would continue to fall into next year. The broker said that the recent budget announcement had raised its hopes for the sector and said they expected the housing markets in the south of the country "to decouple progressively from their declining Northern counterparts".

Its analysts picked out Bovis, up 6.9p to 422p, and Berkeley, up 19p to 1,059p, as having "the best return on equity", while Redrow – which is selling its Scottish unit – was the sector's top performer, advancing 4.6p to 126.3p.

The gold medal position on the mid-tier index was taken by DS Smith, after the packaging group released a short but positive statement in which it said trading continued to be "encouraging", and it finished 13.5p ahead at 211p, its highest level since February.

Also on the leaderboard was the Homebase owner, Home Retail, despite seeing its profits for the year drop 13 per cent. Yet, after its profits warning last month, this was in line with the market's expectations, and the group was driven up 11.5p to 220.8p.

Elsewhere in the retail sector, Ocado dipped 7.4p to 229.6p following the news that the online grocer will face increased competition in London from its partner Waitrose, which is opening a giant virtual store.

Down on the Alternative Investment Market, Ideal Shopping Direct – whose television channels include Create and Craft and Ideal World – rocketed 28p to 216.5p after the home shopping group agreed to a takeover approach from the private equity group Inflexion, which valued it at 220p a share.

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