ARM flexes its muscle on hopes Apple will boost iPhone power
ARM Holdings was the biggest riser in a buoyant London market yesterday, as investors bought into the prospect of the computer chip maker making even more money from its relationship with Apple.
On the day the new iPhone 6 handset went on sale, analysts at Exane noted rumours that Apple would be using more powerful processors in its next models, meaning higher royalties for ARM.
Shares in the UK firm, which have followed Apple’s march lower over the summer as Chinese demand came under scrutiny, rose almost 6pc, or 55.5p, to 982p.
The FTSE 100 bounced 2.5pc higher to close at 6,109.01. The blue-chip index spent the whole day in positive territory after Federal Reserve chairman Janet Yellen hinted that the US central bank would raise interest rates before the end of the year.
“In an apparent effort to reverse some of the damage created by the Fed’s dovish message last week, Yellen gave a more balanced speech,” said analysts at Societe Generale.
Johnson Matthey was among the biggest risers, up 4.8pc to £25.14. The diesel catalyst maker recovered almost all of the ground it lost this week in the wake of Volkswagen’s emissions scandal, although it remains 26pc down in the year to date.
Johnson Matthey, which produces emission controls for engines, is vulnerable to a shift away from diesel, although analysts at Redburn said the market had overestimated the fallout from the VW scandal. Mid-cap property firm Quintain was one of several companies getting a boost from takeovers yesterday.
The Wembley landlord saw a 7.6pc jump in its shares to 141.5p after its takeover suitor, Lone Star, bowed to pressure to raise its bid to 141p per share. The larger firm had been facing opposition from hedge fund Elliott, which built a 14pc stake in Quintain while calling for a higher price.
Also enjoying a bid bounce was Imperial Tobacco, which rose 49p to £35.14 yesterday - taking its weekly gain past 5pc and adding to a 12pc increase over the past month. British American Tobacco joined in the rally with an 87.7p rise to £36.23 on hopes that London-listed firms might come into play as Japan Tobacco searches for scale.
Synergy Health, a takeover target in the FTSE 250, gained 42pc to close at £22.44 after a US court cleared the way for a tie-up with Steris, despite competition complaints from the Federal Trade Commission.
Another strong riser was the mid-cap equipment hire company HSS, which gained 2.6pc to 60p. However, the reason for the gain was the abrupt departure of its chief executive following a series of profit warnings.
Shares in HSS have fallen 70pc since their market debut in February, leading to Chris Davies’ resignation.
However, mining groups were left behind during yesterday’s rally, with Glencore, under pressure from tumbling commodity prices, down a further 1.4pc to 97.2p.