🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

ARM Holdings Deal Gives FTSE A Leg-Up

Published 18/07/2016, 11:23
GBP/USD
-
NDX
-
UK100
-
GBP/TRY
-
US500
-
DJI
-
BAC
-
SGE
-
ARM
-
S_old
-
CL
-
9984
-

European markets opened higher on Monday, encouraged by the failure of an attempted coup d’état in Turkey and Softbank’s (T:9984) huge £23.4bn takeover of British chip-designer ARM Holdings (LON:ARM).

With gains in excess of 40%, ARM Holdings is leading gains on the FTSE 100 by a wide margin after the takeover was agreed with Japan’s Softbank. Sage Group (LON:SGE), the FTSE 100’s only other tech stock was enjoying gains of over 2.5% on expectation of more M&A interest in UK tech shares. A pullback in the price of oil has left O&G and basic resource sectors at the bottom of the UK benchmark.

Softbank’s purchase of ARM Holdings is both opportunistic at a devalued pound-lira exchange rate as well as a big forward-looking play on the future of tech in the “internet-of-things.” It will be Softbank’s biggest purchase since it bought into US mobile phone carrier Sprint (NYSE:S). It is another example of a Japanese firm looking outwards as domestic growth peters out and borrowing rates hit record lows.

The deal is the first major blow to those who have forecasted that Brexit will deter inward investment into Britain. It will be the first test for Prime Minister Theresa May’s new Ministry for Business, Energy and Industrial Strategy and her belief that “transient shareholders are not the only people with an interest when firms are sold or closed.”

The British pound has trimmed some of its sharp losses from Friday, helped by the Bank of England’s Martin Weale who said he was unsure whether he would vote for a rate cut at the August policy meeting. Mr Weale seems to be in the “don’t jump the gun” and “keep the powder dry” camp as opposed to the “crack a nut with a sledgehammer” camp occupied by chief economist Andy Haldane.

US stocks look set for a higher open as investors continue, for now, to buy into the breakout of major averages into new records ahead of the Republican National Convention and a number of key earnings reports. Bank of America's (NYSE:BAC) Q2 report will be the key earnings release on Monday following generally well-received results last week.

USA pre-opening levels
S&P 500: 3 points higher at 2,164
Dow Jones: 14 points higher at 17,530
Nasdaq 100: 5 points higher at 4,594

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Original post

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.