Market Report: Bernstein issues warning over smartphone sales

Hang up on shares in iPhone chipmaker ARM Holdings is the message from Bernstein. The broker, which cut its rating on the stock to underperform, warned that the recent slowdown in sales of smartphones might not be a one-off.

“We see a genuine risk of the smartphone slowdown observed in 1Q 2015 being the first of a series, more than an inventory correction,” Bernstein said. “Even if current shipment expectations are reasonable, further downside is a possibility, and the slowdown on the chipset side should be steeper, suffering from inventory corrections.” Until Bernstein’s downgrade, ARM shares were up 15 per cent in 2015. Its comments dragged the stock to the bottom of the FTSE 100, down 58p or 5 per cent to 1,090p. That is still almost 300p higher than Bernstein’s 800p target price.

The FTSE 100 dropped 54.12 points to 6,753.7 with talks between Greece and its creditors now reaching their climax. Global markets remain on edge as the deadline for a debt deal approaches.

Tesco, up 5.9p to 223.65p, topped the blue chip index after a smaller than expected fall in first quarter sales, which some in the City saw as a start of a potential recovery for the beleaguered supermarket group. Hopes of a turnaround also spurred on shares in rivals Sainsbury’s, up 1.9p to 276.3p, and Morrisons, up 1.1p to 184.2p. A slump from Chinese stocks saw Asia-focused funds slump. The Fidelity China Special Situations fund tumbled 8.6p to 151.5p.

On AIM, Zimbabwe-focused miner Mwana Africa tanked 17 per cent to 1.48p as Peel Hunt handed in its notice as broker and nominated adviser, just weeks after its board members were ousted by shareholders. The company has until 25 July to find a replacement or its shares will be cancelled from AIM.

Shares in IGas Energy, the only London-listed fracking firm, fell 3 per cent to 30.75p after it revealed a slump in revenues as a result of the oil price collapse. Revenues were down to £58.2m from £75.9m the year before, while it swung to a loss of £18.5m against a profit of £2.3m in the previous year.