Market Report: Pre-tax profits rise boosts Arm Holdings

Don’t write off Arm Holdings just yet. The microchip designer that helped power the smartphone revolution climbed 47.5p to 881p yesterday after revealing pre-tax profits rose 9 per cent in the first half.

A 42 per cent jump in licensing revenues helped offset a slowdown in royalties, easing investor fears that a slowdown in smartphone sales would prove a nasty shot for Arm. The Cambridge-based company has always insisted growth areas such as “smart” home appliances would make up for the slump. So far it seems to be right.

Arm led the FTSE 100 higher, with investors largely ignoring on-going tensions in Russia, Ukraine and Gaza. The bluechip index added 66.90 points to 6,795.34.

The fickle nature of current trading was illustrated by the performance of Barratt Developments and Persimmon. Out of favour just a day earlier after news of the first dip in house prices this year, the pair were among the index’s best performers for no other reason than their price had fallen. Barratt added 14.3p to 368.5p; Persimmon was 56p better at 1,302p.

Anglo American improved 55p to 1,600.5p after its South African subsidiary Kumba Iron Ore reported solid half-year figures.

Investors and analysts alike cheered the online retailer Boohoo’s launch of a German language website. Boohoo improved 1p to 38.5p but still sits below the 50p level it was first offered at in March.

Spread better IG Group floated to the top of the mid-cap index, 44.5p better at 619.5p, after pledging to hand more cash back to investors. IG is raising its dividend payout ratio from 60 per cent to 70 per cent.

Recruiter Hays also enjoyed a bounce as a string of brokers took the view that the recent sell-off has been overdone. Hays put on 7.5p to 127.6p.

Tailor Bagir fell 2p to 10p on AIM after admitting conditions have not improved since May’s profit warning, triggered by a major customer, thought to be Marks & Spencer, cutting an order. Bagir said earnings are now likely to be at the lower end of the already lowered $4-$6m range.

A profit warning sent corporate services group Hogg Robinson spiralling down 7p to 65p on the small-cap index. It blamed strong sterling, the trend for self-booking of business travel and higher than expected costs on a contract with the Canadian Government.