Sector movers: Technology helps boost market to two-month highs
The technology hardware and equipment sector helped extend the London market’s run of rises for the week, as China said it will cut its benchmark interest rates.
The FTSE 100 ended up 67.80 points (1.06%) to 6,444.08 – the highest level it has been since August 19. The FTSE 250 rose to 17,240.70, up 196.16 points (1.15%).
The People's Bank of China announced it will cut its one-year deposit rate and one-year lending rate by 25 basis points each to 1.5% and 4.35%, respectively, as it looks to bolster the slowing economy. The rate cut in China, one of the world’s biggest metal consumers, is the sixth since November last year as authorities there strive to prop up the flagging economy, and gave a boost to the London markets.
Three-month futures contracts on base metals on the London Metal Exchange were higher including copper (+0.3%), lead (+0.4%), nickel (1.3%), tin (+0.2%) and zinc (+1.1%), although primary aluminium was flat. Mining company Glencore led the FTSE 100 risers, with Fresnillo also featuring in the top 10, largely thanks to news of the rate cut in China, one of the world’s biggest metal consumers.
ARM Holdings propped up the technology hardware & equipment sector as it continued to rise since it released its third quarter results on Wednesday. Pre-tax profit rose 27% on a normalised basis from the same period last year to £128.4m, on revenue of £243.1m, up 24%. Processor royalty revenue was up 37% on the year, while processor licensing revenue rose 5%, and it indicated it has entered the final quarter with strong royalty momentum.
The pharmaceuticals sector also ended the week on a high, led by Shire on the FTSE 100. In its third quarter earnings statement released on Friday, the Irish firm posted a 20.8% year-on-year drop in third quarter pre-tax profit to $455.5m, as an increase in integration and acquisition costs offset a 3.7% increase in revenue to $1.66bn. But the company said its research and development costs surged 11% year-on-year, as a result of continued investment in the group’s pipeline product and the costs related to its acquisition of NPS Pharmaceuticals.
The construction sector benefitted from Michelmersh Brick Holdings’ 5% share price rise. It followed building materials peer Travis Perkins rebounding from news earlier in the week its full-year earnings are likely to be at the lower end of market expectations due to weakness in the repair, maintenance and improvement market. But on Friday, Citigroup upgraded Travis Perkins stock to buy, boosting the company and the construction sector as a whole.