London Report: Arm’s advance helps to steady FTSE 100 index

BRITAIN’S blue-chip equity index ended flat yesterday as chip-maker Arm Holdings, boosted by the launch of Apple’s latest iPhone, helped offset profit-taking on DIY retailer Kingfisher after its results.

Shares in Arm rose 4.8 per cent in volume one-and-a-half times its 90-day average a day after partner Apple unveiled a new smartphone using the Cambridge-based chip designer’s latest technology.

“It is the first handset that has Arm’s latest generation technology in it... so that’s very good in itself,” says RBC Capital Markets analyst Andrew Dunn.

The stock was the top riser on the FTSE 100 index, which closed 4.44 points higher, or 0.1 per cent, at 6,588.43 points. The mid-cap FTSE 250 fell 0.2 per cent to 15,245.78 points slipping off an all-time high hit the previous day.

They trailed solid gains on Germany’s Dax, Italy’s FTSE MIB and Spain’s Ibex as investors cashed in on UK-focused recent outperformers such as Kingfisher and mid-cap housebuilder Barratt Developments.

The two stocks fell 2.7 per cent and 4.6 per cent respectively, after reporting in-line results, frustrating trader bets for estimate-beats and spurring profit taking on two stocks that have risen 47 per cent and 60 per cent year to date.

Investor sentiment on both firms, which are heavily exposed to Britain's domestic economy and, in Kingfisher’s case, France, was high after a string of positive economic data out of Europe.

“We have seen some profit taking coming through,” said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers. “As is so often the case it’s better to travel than to arrive as far as the stock market is concerned.”

The more upbeat macro backdrop in Britain was underpinned yesterday by data showing the unemployment rate in July dropped to its lowest since late last year.

HSBC knocked five points off the FTSE after JP Morgan downgraded its recommendation on the stock to “hold” from “buy”, preferring domestic British banks in light of improving economic conditions in the country.

Giles Watts, head of equities at City Index, said he remained confident the index would continue to rise into the year-end as the global economy improved.

But he cautioned the prospect of a likely reduction in US monetary stimulus could sap investor appetite this month.