Nordstrom Shares Rise Over 5% Aftermarket Following Strong Earnings

LOCAL MARKET COMMENTARY

The Top-40 index on the South African stock market closed down by 0.33% on Monday. Investors are turning their attention to the upcoming releases of monthly producer inflation, money supply, budget, and trade balance data for insights into the health of the country's economy. Harmony Gold announced that it expects its profit for the full year ended June 30 to have likely doubled, driven by increased production, improved grades, and higher metal prices.

EUROPEAN MARKET COMMENTARY

European markets closed slightly higher on Tuesday, with travel stocks leading the gains. Germany's second-quarter GDP fell by 0.1%, as confirmed by the country's statistics office, matching preliminary estimates. In the U.K., the British Retail Consortium reported that shop prices entered deflation in August for the first time in nearly three years, dropping by 0.3% from a previous 0.2% inflation. Meanwhile, Hungary's central bank announced it would keep interest rates unchanged at 6.75%, pausing its rate-cutting cycle.

US MARKET COMMENTARY

The S&P 500 closed higher on Tuesday, and the Dow Jones reached a record-high close, as investors anticipated Nvidia's quarterly report today and upcoming economic data that could provide insights into future interest rate cuts. U.S. consumer confidence hit a six-month high in August, though concerns about the labour market grew after the unemployment rate rose to 4.3%, the highest in nearly three years. Investors are also awaiting the July Personal Consumption Expenditure data, due on Friday, for further clues on the pace of potential rate cuts.

ASIA MARKET COMMENTARY

Asia-Pacific markets declined this morning as investors reacted to Australia's higher-than-expected July inflation numbers. The Consumer Price Index (CPI) rose 3.5% year-on-year, slightly above the 3.4% forecast by economists and down from 3.8% in June. This is the lowest CPI figure since March. Meanwhile, minutes from the Reserve Bank of Australia's latest meeting revealed that the central bank had considered raising interest rates in its ongoing efforts to control inflation.

CURRENCY MARKET COMMENTARY

The South African rand remained stable on Tuesday as investors awaited key local data releases later in the week. Meanwhile, the U.S. dollar hovered near its lowest level in over a year against a basket of currencies this morning, with the British pound trading close to multi-year highs. Market participants are focused on upcoming indicators that could provide insights into the size of the anticipated U.S. interest rate cut next month.

COMMODITY MARKET COMMENTARY

Gold prices rose on Tuesday, supported by a weaker dollar, as investors awaited upcoming inflation data that could influence the size of an expected interest rate cut by the Federal Reserve next month. Meanwhile, oil prices rebounded this morning after a sharp decline the previous day, which had interrupted a three-day rally. The market has been volatile, with investors weighing concerns over potential supply disruptions in Libya and the Middle East against worries about global fuel demand.

WILSON BAYLY HOLMES (WBO) -0.20% 

The Group expects to report higher earnings for the year ended 30 June 2024. For continuing operations, earnings per share (EPS) are projected to increase by 5% to 15%, ranging between 1 763 and 1 931 cents, while headline earnings per share (HEPS) are expected to rise by 10% to 20%, reaching between 1 873 and 2 044 cents. For total operations, EPS is anticipated to grow by 15% to 25%, ranging between 1 714 and 1 862 cents, and HEPS by 25% to 35%, reaching between 1 894 and 2 045 cents, compared to the previous year's figures. 

MASTER DRILLING GROUP LIMITED (MDI) +3.43% 

For the six months ended 30 June 2024, the company reported a 17.3% increase in revenue, rising from $108.2 million to $127.0 million. However, profit dropped sharply by 75.1%, falling from $14.6 million to $3.6 million. Headline earnings per share (HEPS) in USD decreased by 3.2%, while in ZAR terms, it saw a slight dip of 0.5%. Basic earnings per share (EPS) experienced a significant decline of 78.7% in USD and 78.1% in ZAR. On a positive note, net asset value per share in USD rose by 8.0%, and net cash from operating activities surged by 119.8%. The company has a revenue pipeline of $599.6 million and a committed order book of $271.4 million. No interim dividend was declared, in line with past practice, but a dividend of 52.5 cents per share in ZAR for FY2023 was paid in May 2024. 

SEA HARVEST GROUP LIMITED (SHG) -0.72% 

For the six months ended 30 June 2024, the company's revenue increased by 3% to R3.3 billion, with international revenue making up 53% of the total, up from 45% the previous year. Gross profit rose by 22% to R944 million, improving the gross profit margin from 24% to 29%. Operating profit grew by 23% to R311 million, with the operating profit margin increasing to 9%. Earnings before interest and tax (EBIT) saw a 6% rise to R373 million, maintaining an EBIT margin of 11%. However, profit after tax decreased by 7% to R185 million, and profit attributable to shareholders dropped by 17% to R176 million. Headline earnings fell by 32% to R144 million. Basic earnings per share (EPS) declined by 21% to 61 cents, while basic headline earnings per share (HEPS) dropped by 36% to 50 cents. Net asset value (NAV) per share increased by 15% to 1 354 cents. 

BRIMSTONE INVESTMENT CORPORATION LIMITED (BRT) 0.00% 

The company saw a significant increase in profits from its associate Oceana, which nearly doubled to R187 million. Headline earnings per share also more than doubled, rising by 110% to 71.9 cents. During the period, the company repaid R357.6 million to funders and repurchased 3.5 million shares for R16.2 million, with an additional 1 million shares repurchased afterward. However, the deconsolidation of Sea Harvest resulted in a net loss of R562.1 million. 

Nordstrom (JWN) -2.4% 

Nordstrom exceeded Wall Street's expectations in its second fiscal quarter, reporting adjusted earnings per share of 96 cents, significantly higher than the anticipated 71 cents. Despite this, the Seattle-based retailer provided cautious guidance for the full year, with adjusted earnings now expected to be between $1.75 and $2.05 per share. While sales rose to $3.89 billion, slightly missing expectations, comparable sales increased by 1.9%, and gross merchandise value grew by 3.5%. Although quarterly profits were lower compared to the previous year, the company saw a turnaround in its six-month performance, moving from a net loss of $67 million last year to a profit of $83 million this year. 

Polyus (PLZL) -0.4% 

Russia's largest gold miner, Polyus, reported a 183% increase in first-half profit to $1.58 billion, driven by soaring global gold prices despite Western sanctions. The company's adjusted EBITDA rose 20% to $2.02 billion on revenue of $2.73 billion, reflecting the higher gold prices. Polyus also boosted its 2024 production guidance to 2.75-2.85 million ounces and reported a 2% increase in first-half gold output to 1.47 million ounces. The company is reviewing the costs of its $3.3 billion Sukhoi Log gold project, with an update expected in the fourth quarter. 

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