FTSE in-depth: Demand boosts ARM

By ROB DAVIES FOR THE DAILY MAIL
Updated: 04:04 EST, 3 March 2010

Contrary to clichÈ, the chips were most definitely up yesterday, after UBS revised its revenue growth forecast for the semi-conductor industry up from 12% to 18% for 2010.

On the up: Semi-conductor forecasts have been resived up to 18%

ARM Holdings, which makes chips crucial to Apple's iPhone and new flagship product, the iPad, leapt ahead by 8.9p to settle at 216.7p. The Cambridge-based firm had at least one of its chips in 90% of all smartphones sold last year and beat analysts expectations in February to record only a slight drop in fourth-quarter pretax profit.

A breezy statement from US counterpart SanDisk - which hiked its first-quarter revenue forecast on the back of robust sales - provided an optimistic read-across for investors, while the firm's position as a dollar earner helped it reap the whirlwind currently engulfing the pound.

British Airways continued its upward trajectory, despite the looming chaos associated with strike action by cabin crew. The stock climbed 13.1p to 225.5p, thanks in part to optimism engendered by a narrowerthanexpected loss at German rival Lufthansa.

Figures from the International Air Transport Association showing passenger demand up 6.4% on last February completed a bumper day for the airline.

It was a third straight day of gains for the Footsie, which climbed 78.12 to a six-week high of 5484.06, shrugging off the growing panic surrounding the pound.

Analysts pointed out that the index won't suffer too much from fears about the UK economy, given that so many London-listed multinationals derive the lion's shares of their profits elsewhere.

The Dow was also up by the middle of the day, gaining 26.37 points to 10430.16.

The Footsie's latest rise was helped by a revival among banks following a brief spot of selling based on worse-than-expected results from HSBC. Standard Chartered pioneered the banking rally, rising 64.5p to 1574.6p.

Miners also staged a modest comeback, after slipping yesterday due to copper supply worries following the devastating earthquake in Chile, the world's biggest producer of the metal.

But the biggest gainer among miners was silver specialist Fresnillo, after it reported pretax profit up 71% to £306m, boosting its stock by 35p to close at 802.68p.

Africa-focused oil and gas explorer Chariot Oil & Gas rocketed up 7.75p (or 22%) to 42.75p, after it hoisted an estimate of its available oil reserves by 3.3bn barrels to more than 8.5bn barrels. Brokerage Ambrian said the update provided further indication of the exploration potential for the firm's operations in Namibia.

High street outdoor clothing specialist Blacks Leisure Group was also on a meteoric trajectory after Mike Ashley's Sports Direct confirmed it was considering a bid. The stock was up 6.75p to 57.6p.

A 57% slump in pretax profit to £75.7m couldn't hurt engineering and ceramics firm Cookson. It gained 4p to 472p, as management revealed their expectations of improvement in steel production and its electronics end markets.

Aerospace, defence and energy firm Meggitt - which makes flight display systems for Airbus and Boeing - gained 5.8p to 295p despite a 4% fall in full-year pretax profit, citing an expected upsurge in the civil aerospace arena.

High street stalwart HMV was relatively quiet, edging up 1.85p to 70.95p, but expect talk of a private equity bid for the owner of Waterstone's to resurface over the next few weeks, inflating the stock as the rumour mill begins to turn.

On the downside, Prudential continued yesterday's slide following its announcement of a £23.7bn acquisition of the Asian assets of bailed-out US insurer and Manchester United sponsor AIG. The insurer was the Footsie's biggest faller, down 42.5p to 491.67p.

Vedanta Resources, the Indian miner listed on the London Stock Exchange, fell back 87p to 2,580p after announcing Europe's largest convertible bond issue so far this year. The copper producer will sell £518m worth of notes due in 2017, in an effort to refinance its debt.

Shares in Keller Group - the construction firm building the foundations for London's 2012 Olympic stadium - slid 24p to 650.04p, after full-year pretax profit fell 34% to £74.7m. Analysts at FinnCap remain wary of the stock, advising caution until governments feel more able to spend on infrastructure.

Sub-prime lender Provident Financial was in a sorry state after falling short of analysts' expectations to post pretax profit down 2.4% at £125.7m.

The lender, which has faced criticism over the high interest rates it charges, has suffered from an increase in caution among would-be borrowers and its shares had slipped 52.5p to 928.15p by close of play yesterday.