Airbus Lifts Dividend Target, Reaffirms 2025 Outlook Amid Supply Chain Recovery

Local Market Commentary

The JSE Top 40 and All Share indices recorded modest gains on Wednesday, rising by 0.37% and 0.35% respectively. The Top 40 closed at 87,470.2 points, while the All Share ended at 94,992.8 points. The market was supported by stronger-than-expected local data — April retail sales jumped 5.1% year-on-year, a sharp improvement from March’s revised 1.2%, with seasonally adjusted monthly growth of 0.9%. Meanwhile, inflation held steady at 2.8% in May, staying below the SARB’s 3%–6% target range. This continued trend of low inflation strengthens the case for the central bank to lower its official inflation target, which could improve South Africa’s long-term economic competitiveness. Meanwhile, South Africa is preparing to re-engage with the Trump administration at the US-Africa Business Summit, proposing increased LNG imports, joint critical minerals exploration, and tariff relief for local auto and steel exports—key initiatives aimed at averting looming reciprocal tariffs.

European Market Commentary

European equity markets declined, with the STOXX 600 hitting a near one-month low, as investors awaited the Fed’s rate decision amid persistent Middle East tensions. The Bank of England is expected to hold rates steady, monitoring inflation and energy risks linked to the Israel-Iran conflict. UK inflation moderated in May, particularly in services and wage growth, while France is forecast to grow just 0.2% per quarter through year-end, constrained by weak manufacturing and austerity. British housing activity also cooled significantly in April due to increased transaction taxes, with annual price growth halving to 3.5%.

U.S. Market Commentary

U.S. markets ended mixed after the Fed held interest rates steady and maintained expectations for two cuts in 2025, although a growing minority now foresee no reductions. Chair Jerome Powell highlighted continued inflation risks, especially from tariffs, and stressed the data-dependent nature of the rate path. Labour market data showed initial jobless claims remain elevated, suggesting moderating momentum. Geopolitical tensions added further uncertainty, with Trump offering no clarity on potential U.S. military involvement in the Israel-Iran conflict as rhetoric escalated on both sides.

Asia Market Commentary

Asia-Pacific markets declined as investors digested the Fed’s rate hold and rising geopolitical risks. Australia’s jobless rate held steady at 4.1% for the fifth straight month, while Indonesia's central bank paused easing to encourage credit growth amid global uncertainties. Despite headwinds from tariffs and regional conflict, Asian bond markets attracted strong foreign inflows, with Malaysia leading the surge in demand. Investors are increasingly favouring the region's debt markets as a stable, high-yield alternative to U.S. fixed income.

Commodity Market Commentary

Gold prices rose modestly as the prolonged Middle East conflict reinforced demand for safe-haven assets, though the Fed’s tempered rate cut outlook capped further upside. Oil retreated amid investor caution, with Trump’s ambiguous stance on potential U.S. intervention in the Israel-Iran conflict fuelling market unease. While Iran remains a major OPEC producer, the strategic importance of the Strait of Hormuz — through which nearly 20 million barrels of oil transit daily — poses a broader risk to global energy flows if hostilities escalate further.

Currency Market Commentary

The rand strengthened following upbeat local retail data and steady inflation, ahead of the Fed’s closely watched decision. The dollar remained broadly stable, with Fed Chair Powell reiterating a cautious approach to rate cuts given inflation risks. Global FX sentiment stayed fragile as the Israel-Iran conflict intensified, with the market on edge over whether the U.S. will escalate its involvement. Geopolitical developments remain a key driver of short-term currency moves as investors weigh risk premiums across regions.

Renergen Limited (REN) -3.23%

Renergen’s Q1 FY26 update reflects resilient LNG production of 1,311 tons, tempered by a planned maintenance shutdown in May, while helium operations were temporarily paused to finalise optimised filling infrastructure. The proposed merger with ASP Isotopes is set to create a unique critical minerals platform, underpinned by a $30 million facility to complete Phase 1 and advance Phase 2 development. Exploration progressed with new Vertical Seismic Profiling data identifying promising gas anomalies to guide upcoming drilling. Negotiations with Springbok Solar continue following regulatory adjustments to its project approval.

Metrofile Holdings Limited (MFL) +6.72%

Metrofile has confirmed that talks regarding a potential acquisition, as initially announced on 26 March and 6 May 2025, are still underway. Shareholders are advised to remain cautious when dealing in the company’s shares until further announcements are made. The board and Independent Board have verified the accuracy and completeness of this update.

Brait PLC (BAT) +1.40%

Brait’s FY25 results show a 6% increase in NAV per share to R3.06, driven by robust contributions from Virgin Active and Premier, which constitute 94% of total assets. Virgin Active reported 13% revenue growth and a 45% EBITDA rise, supported by stronger yields and membership growth across all regions. Premier posted 7% revenue and 15% EBITDA growth, with MillBake performing strongly and net leverage improving to 0.7x. New Look saw continued headwinds in UK retail, with sales down 4%, but has initiated a £30 million recapitalisation to support its online transition. Brait completed a major recapitalisation, reducing debt by R1.4 billion and securing R1.1 billion in available liquidity.

Airbus SE (AIR) +1.39%

Airbus has raised the upper limit of its dividend payout target to 50% and reaffirmed its 2025 guidance, signalling confidence in long-term growth despite persistent supply chain disruptions. Speaking during the Paris Airshow, management highlighted progress in easing component delays—down 40% year-to-date—but warned that strikes at supplier sites remain a risk. The company aims to deliver 820 aircraft in 2025 and is reinforcing dual sourcing to mitigate trade-related vulnerabilities. Airbus also reiterated its focus on sustainable dividend growth and long-term cash conversion of 1.0x, underscoring its commitment to shareholder returns.

Microsoft Corporation (MSFT) +0.46%

Microsoft is preparing to cut thousands of jobs, particularly in sales, as part of broader cost optimisation efforts to support its aggressive $80 billion AI-driven capex programme, Bloomberg reports. The upcoming layoffs, expected early July, follow a 6,000-person reduction in May and reflect the company's shift toward scaling AI infrastructure, notably through expanded data centre capacity. While Microsoft declined to comment, the restructuring underscores its commitment to maintaining leadership in AI, even as it realigns workforce composition to meet evolving strategic priorities.

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