Shares rise on the back of ARM takeover

LONDON

THE FTSE 100 fell just short of breaking through the 6,700 mark for the first time in 11 months after shares in ARM Holdings soared following its takeover approach from Japan’s SoftBank.

The index was 26.2 points higher at 6695.4 after the value of the UK microchip designer jumped more than 40 per cent, or 486p to 1675p, after the Japanese firm tabled a £24 billion deal.

SoftBank pledged to double the tech giant’s 3,000-strong UK workforce over the next five years, while holding on to its Cambridge headquarters and its existing management team.

The deal is the biggest ever Asian investment in the UK and values the technology firm at 1700p per share, a 43 per cent premium on Friday’s closing share

price of 1189p. Neil Wilson, markets analyst at ETX Capital, said: “The pound is down around 10 per cent since the referendum and this makes British firms a lot more attractive.

He added: “Poundland was recently snapped up by Steinhoff and if this ARM deal is anything to go by, we can expect a torrent of deals to flow.”

The pound also rallied higher after Bank of England policymaker Martin Weale questioned whether interest rates needed to be cut next month from 0.5 per cent, where they have remained since March 2009.

Mr Weale, a member of the Bank’s Monetary Policy Committee, said the Bank was “not a nurse to markets” and there were no signs that consumers or businesses were “panic-struck” following Britain’s decision to leave the EU.

The MPC defied predictions by keeping interest rates on hold earlier this month, but signalled action could be taken in August to boost the economy.

Sterling was up 0.7 per cent against the dollar at 1.329, while the pound also rose 0.3 per cent against the euro at 1.199.

Across Europe, Germany’s Dax was slightly down, while the Cac 40 in France edged 0.3 per cent lower.

The price of oil took a tumble after an economic report by market intelligence firm Genscape pointed to rising US stocks of crude.

Brent crude was down 1.8 per cent or 86 cents to 46.75 US dollars a barrel.

In stocks, travel firms were under pressure amid fears that the failed coup attempt in Turkey would have a damaging impact on the tourism industry.

TUI group was among the biggest fallers, down 19p to 942.5p, while budget airline easy Jet edged down 2p to 1138p. However, housebuilders were enjoying a lift after Mr Weale signalled that he may not vote for an interest rate cut in August.

Taylor Wimpey was up 3.7p to 147.7p, Charles Church-builder Persimmon lifted 34p to 1605p and Berkeley Group rose 56p to 2680p.

Property stocks have regained strength after taking a hammering in the wake of the Brexit vote amid fears the decision to leave the EU would impact demand.

The biggest risers on the FTSE 100 were ARM Holdings up 486p to 1675p, Royal Bank of Scotland up 5.8p to 189.8p, Marks and Spencer up 9.4p to 334.7p, Taylor Wimpey up 3.7p to 147.7p.

The biggest fallers were BHP Billiton down 19.7p to 976.8p, TUI down 19p to 942.5p, BP down 7.9p to 449.3p, and BT Group down 5p to 395p.

NEW YORK

WALL Street closed slightly higher yesterday to mint new record highs for the S&P 500 and the Dow industrials, fuelled by Bank of America’s better-than-expected profit and a major tech sector acquisition. Soft Bank’s $32billion deal to buy British chip designer ARM Holdings (ARMH.O) lifted U.S. chip stocks, and the technology sector led the way higher on the S&P 500. The tech-heavy Nasdaq rose more than the S&P and the Dow. Bank of America’s (BAC.N) earnings report continued the momentum for US banks, kicked off by JPMorgan (JPM.N) last week. The bank’s shares rose 3.3 per cent to $14.11, helping the S&P financial index .SPSY gain 0.4 per cent.

The Dow Jones industrial average .DJI rose 16.5 points, or 0.09 percent, to 18,533.05, for its seventh consecutive up day. The S&P 500 .SPX gained 5.15 points, or 0.24 per cent, to 2,166.89 and the Nasdaq Composite .IXIC added 26.20 points, or 0.52 per cent, to 5,055.78.

The SoftBank deal sent ARM’s U.S.-listed shares surging 40.5 per cent, while the semiconductor index .SOX rose 1.5 per cent.

Hasbro (HAS.O) fell 6.6 per cent to $79.82 on concerns of slowing growth in the toy maker’s sales targeted at boys, its biggest business. Rival Mattel (MAT.O) dropped one per cent.

After the market closed, Netflix (NFLX.O) shares tumbled 14.5 per cent. The streaming video company’s subscription additions in the second quarter fell short of analysts’ expectations.