Market Report: Imagination gains from Apple move

Oscar Williams-Grut
Thursday 15 August 2013 01:14

Microchip makers piggybacked on a rally at Apple yesterday sparked by Carl Icahn, the veteran US investor, taking a stake the iPhone maker. Apple shares hit a six-month high after Mr Icahn revealed on Twitter that he is pushing for a larger buyback at the US tech giant after he built up a large position in Apple and held talks with its chief executive, Tim Cook.

Arm Holdings and Imagination Technologies, whose microchips are used in Apple devices, benefited from the rally after a bumpy recent run for both companies. Arm added 5.5p to 897p while Imagination sparked up 37.5p to 286p.

Aviva was among the day's biggest risers on the top-flight index after an upbeat note from Goldman Sachs. Scribblers at the bank said the insurer's interim results last week were "comfortably ahead of our estimates", and were impressed by the progress of restructuring plans. Goldman kept a neutral rating but raised its 12-month price target to 405p from 390p. Canaccord was also bullish on Aviva, lifting it from hold to buy and upping its target price from 385p to 460p. Aviva's shares rose 6.2p to 404.9p.

The asset manager Schroders benefited from a positive note from Morgan Stanley, as Bruce Hamilton at the broker upgraded his target price from 2,525p to 2,650p. Schroders moved up 24p to 2,450p.

There was strong interest in the state-backed banks Lloyds and Royal Bank of Scotland. The pair were near the top of the benchmark index, with heavy volumes for both. This was despite a note from JPMorgan calling for a strategic review at RBS, and adding that "none of the options create enough upside for us to turn positive ahead of the 'bad bank' review". RBS added 11.7p to 344.7p while Lloyds banked 1.36p to 77.14p.

After a torrid month in China, GlaxoSmithKline finally had some good news as JPMorgan upgraded the pharmaceuticals giant to neutral, saying it sees strong potential in three pipeline drugs. Glaxo jumped 1.5p to 1681.5p.

The FTSE 100 was largely flat yesterday, down 24.51 points at 6,611.94, as miners took a battering. Troubled Kazakh digger ENRC tumbled to the bottom of the index after a steeper-than-expected 17 per cent fall in first-half profits. It lost 7.2p to 229.3p. Rio Tinto dropped 69.5p to 3193.5p while Anglo American drilled down 27.5p to 1545p. The platinum miner Lonmin yesterday signed a deal with unions in South Africa, hoping to end friction with its workforce. The agreement comes almost a year after 34 workers were killed by police at Lon-min's Marikana plant, where another worker was shot this week. Lonmin was up 1.1p at 353.4p.

The property group Countrywide wobbled as news emerged that two major investors, the private equity firms Apollo and Oaktree, had between them sold a 16 per cent share of the company, six months after it returned to the stock market after a six-year absence.

The firms pocketed an estimated £210m between them – with shares around the 600p mark, up from the 350p March float price – although exact figures were not revealed. Jim Clarke, the chief financial officer, was upbeat on the sale, saying: "A lot of people were trying to buy the shares. The sale creates liquidity and allows them to crystallise a profit."

But investors took a different view, and the FTSE 250 company lost 27p to 570p.

The shock announcement of the US Justice Department's attempt to block the $14bn mega-merger of American Airlines and US Airways could have knock-on effects for British Airways owner IAG, according to Deutsche Bank. IAG has a lucrative transatlantic joint venture with American Airlines, and had hoped the carrier's merger would see more traffic for the venture, a prospect that now looks at risk.

Despite this, scribblers at Deutsche Bank kept their buy rating on IAG while Nomura upped its target price from 283p to 335p. Macquarie raised its rating of the group to outperform, noting progress with restructuring its Spanish carrier Iberia. After early gains, IAG tumbled 4.6p to 316p.

EasyJet lost 34p to 1310p after news emerged that one of its flights from Milan to Lisbon was forced to make an emergency landing when an engine cover came adrift during take-off.

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