Intel CEO Pat Gelsinger Resigns Amid Board Discontent Over Turnaround Strategy

LOCAL MARKET COMMENTARY

The Johannesburg Stock Exchange closed higher on Monday, with the Top 40 index rising 1.61% to 77,278 points and the All Share index gaining 1.44% to 85,731 points. South Africa's manufacturing activity declined in November due to fluctuating demand, while vehicle sales grew by over 8%. Investors are now focused on the release of Q3 GDP data for economic insights. Meanwhile, S&P Global Ratings placed Transnet on CreditWatch, citing concerns over its financial outlook, though it retained the company’s ‘BB-’ credit rating and affirmed its national scale ratings at ‘zaAA-/zaA-1+’.

EUROPEAN MARKET COMMENTARY

European markets ended higher on Monday as investors assessed global economic trends and interest rate outlooks heading into year-end. Equities advanced despite data showing declining manufacturing activity in the eurozone and the U.K., with the EU's unemployment rate remaining unchanged in October. Meanwhile, France faces heightened political uncertainty as far-right and left-wing parties filed no-confidence motions against Prime Minister Michel Barnier, likely leading to the government's collapse. The crisis has rattled investor confidence, pressuring French assets and casting doubt on the approval of the country's annual budget.

US MARKET COMMENTARY

On Monday, the Nasdaq and S&P 500 reached record highs, fuelled by tech stocks and strong November performance, while the Dow edged lower. Investors are closely watching upcoming economic data, including Friday's key jobs report. Federal Reserve Governor Christopher Waller hinted at a possible interest rate cut at the December meeting, citing restrictive monetary policy. Meanwhile, the ISM reported improved U.S. manufacturing activity in November. Other anticipated data this week include private sector job growth, the ISM services report, and weekly jobless claims.

ASIA MARKET COMMENTARY

Asia-Pacific markets opened higher this morning, with South Korea's November inflation rising to 1.5% year-on-year, up from 1.3% in October but below the 1.7% forecast by economists. Australia's government significantly increased infrastructure and defence spending in the third quarter, bolstering economic growth amid consumer struggles with high borrowing costs. This spending helped counterbalance weak trade performance and declining inventories, likely driving overall economic activity during the period.

CURRENCY MARKET COMMENTARY

South Africa's rand weakened on Monday after comments from U.S. President-elect Donald Trump unsettled traders in BRICS economies, raising concerns about future trade relations. The dollar strengthened today as political uncertainty in France pressured the euro, while trade tensions and China's economic slowdown pushed the yuan to a one-year low. Meanwhile, South Africa's government clarified that there are no plans to create a new BRICS currency, following misreporting that suggested such an initiative. The Department of International Relations and Cooperation (Dirco) issued a statement to correct the misinformation after Trump's threat to impose 100% tariffs on BRICS countries backing the creation of an alternative to the US dollar.

COMMODITY MARKET COMMENTARY

Gold prices held steady this morning as investors awaited key U.S. economic data for clues on the Federal Reserve's interest rate outlook. Meanwhile, oil prices dipped slightly amid uncertainty, with markets focused on the upcoming OPEC+ meeting. India is expected to experience above-average temperatures during the upcoming winter season, with both minimum and maximum temperatures higher than usual, according to the India Meteorological Department. This raised concerns about the potential impact on crop yields, particularly for wheat and rapeseed, as fewer "cold wave days" are anticipated from December to February.

Naspers Limited (NPN) +4.97%

For the period ending 30 September 2024, Naspers reported a revenue increase to $3,443 million, up from $3,007 million in the previous year. Earnings per share (EPS) from continuing operations rose to 1,123 US cents from 812 US cents, while headline EPS increased to 643 US cents from 311 US cents. Core headline EPS from continuing operations grew to 865 US cents from 454 US cents. For total operations, EPS reached 1,097 US cents, up from 761 US cents, with headline EPS rising to 638 US cents from 281 US cents, and core headline EPS increasing to 860 US cents from 427 US cents.

Prosus NV (PRX) +3.48%

For the period ending 30 September 2024, Prosus reported revenue of $2,963 million, up from $2,556 million in 2023. Earnings per share (EPS) from continuing operations increased to 191 US cents from 137 US cents, while headline EPS grew to 107 US cents from 54 US cents. Core headline EPS from continuing operations reached 144 US cents, up from 76 US cents. For total operations, EPS rose to 187 US cents from 129 US cents, with headline EPS increasing to 106 US cents from 49 US cents, and core headline EPS improving to 143 US cents from 72 US cents.

Nampak Limited (NPK) -2.49%

For FY24, Nampak showed significant recovery, with revenue from continuing operations rising slightly to R9,956 million (up 1%), and trading profit surging to R1,048 million, more than doubling from the previous year. Operating profit rebounded strongly to R1,715 million, aided by net impairment reversals of R471 million. Profit for the year from continuing operations improved to R626 million, compared to a loss of R2,215 million in FY23, while headline earnings per share rose to 3,361.1 cents from a loss of 39,004.6 cents. Losses from discontinued operations narrowed to R1,007 million (42% improvement), and the total operations' loss for the year reduced to R381 million. Cash generated from operations increased by 114% before working capital changes, with net debt slightly reduced to R4,436 million, maintaining a strong current ratio of 1.9.

Standard Bank Group Limited (SBK) -1.13%

For FY24, Standard Bank reaffirmed its commitment to delivering on its guidance, targeting low single-digit banking revenue growth in ZAR and low double digits in constant currency. It expects banking revenue growth to match or exceed operating expense growth, maintaining or improving its cost-to-income ratio. The group also targets a return on equity (ROE) firmly within the range of 17% to 20%.

Zscaler Inc. (ZS) +0.93%

Zscaler raised its full-year revenue and earnings forecasts after surpassing quarterly revenue expectations, driven by strong demand for its cybersecurity services. The company now anticipates fiscal 2025 revenue of $2.62-$2.64 billion, up from its prior estimate of $2.60-$2.62 billion, and adjusted earnings per share of $2.94-$2.99, compared to the earlier forecast of $2.81-$2.87. In the first quarter, Zscaler reported revenue of $627.96 million, beating the $606.2 million consensus, while its net loss per share narrowed to 8 cents from 23 cents a year earlier. However, its second-quarter revenue forecast of $633-$635 million, which aligns with Wall Street expectations, disappointed investors, leading to a 6% decline in its stock during after-hours trading.

Honeywell International Inc. (HON) -1.28%

Honeywell has revised its fourth-quarter and full-year profit and sales forecasts downward to reflect investments tied to a new agreement to supply aviation technology for Bombardier aircraft. While the deal entails substantial near-term research and development costs, Honeywell expects it to generate up to $17 billion in revenue over its lifespan. The company lowered its Q4 sales forecast to $9.8-$10.0 billion, down from $10.2-$10.4 billion, and adjusted its earnings per share outlook to $2.26-$2.36 from the earlier range of $2.73-$2.83.

Intel Corporation (INTC) -0.50%

Intel CEO Pat Gelsinger has stepped down after less than four years in the role, following board dissatisfaction with the progress of his turnaround strategy. The resignation, effective December 1, came after a board meeting where directors concluded that Gelsinger's plan to restore Intel's leadership in advanced chip manufacturing was too costly and slow. Offered the choice to retire or be removed, Gelsinger chose to step down, leaving before completing his four-year roadmap to reclaim Intel's position as the leader in chip technology—a title currently held by Taiwan Semiconductor Manufacturing Co.

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