CrowdStrike Guides Conservatively Amid Softer IT Spend, Launches $1bn Buyback

Local Market Commentary

The Top 40 index fell 0.36% to close at 87,181.7 points, while the All Share index dipped 0.29% to 94,882.3 points. South Africa's economy stagnated in the first quarter, with seasonally adjusted quarter-on-quarter GDP growth of just 0.1%, as contractions in mining (-4%) and manufacturing (-2%) offset a robust 15% gain in agriculture. Despite outperforming Reuters’ consensus forecast of 0.0%, the data underscores the country’s long-term structural challenges, with average annual growth remaining below 1% since the 2008–09 financial crisis. Year-on-year, GDP expanded 0.8%, slightly above the 0.7% estimate. Meanwhile, Q4 2024 growth was revised down to 0.4% from 0.6%. Last week, the South African Reserve Bank cut its 2025 growth forecast to 1.2% from 1.7%.

European Market Commentary

Europe’s benchmark equity index closed broadly unchanged on Tuesday, as sentiment remained fragile under the weight of tepid economic data and ongoing global trade tensions. Cooling inflation across the eurozone — now well below the ECB’s target — reinforced expectations for a policy pivot, with markets pricing in a 25 basis point rate cut on Thursday, which would bring the main rate down to 2%. This would mark the ECB’s eighth cut since June 2024. In labour market news, Spain's registered unemployment fell to 2.45 million in May — the lowest level since July 2008 — signalling continued strength in job creation despite broader macro headwinds.

U.S. Market Commentary

U.S. equity markets closed higher on Tuesday, buoyed by strong performances from Nvidia and other semiconductor stocks, as investors looked ahead to potential trade negotiations that may clarify Washington’s tariff agenda. The White House confirmed that President Trump and China’s President Xi Jinping are expected to speak later this week, following renewed tensions after Trump accused Beijing of breaching a Geneva agreement on tariff reductions — a claim China dismissed as baseless. Economic data presented a mixed picture: April job openings rose, but an uptick in layoffs pointed to cooling labour market conditions. Factory orders fell sharply by 3.7% in April, reversing a 3.4% gain in March, as the prior surge in activity from pre-tariff inventory building subsided.

Asia Market Commentary

Asia-Pacific equities advanced on Wednesday, tracking overnight gains on Wall Street driven by a tech rally spearheaded by Nvidia. South Korea outperformed regional peers, buoyed by softer-than-expected inflation data. The country's consumer price index declined by 0.1% in May from the prior month, bringing the year-on-year rate down to 1.9% — the slowest pace since December 2024 and below the 2.1% median forecast from a Reuters poll. The cooling inflation figures follow last week’s interest rate cut by the Bank of Korea, its fourth in the current easing cycle, aimed at bolstering economic recovery amid persistent headwinds from U.S. trade tariffs.

Commodity Market Commentary

Gold prices rose on Wednesday as renewed U.S.-China trade tensions and global economic unease boosted safe-haven demand, with a weaker U.S. dollar lending further support. In contrast, oil prices edged lower in Asian trade, pressured by the prospect of increased OPEC+ output and escalating tariff risks, though Canadian supply concerns helped limit losses. Meanwhile, global alarm over China's export restrictions on rare earth materials deepened, as international automakers warned of potential production disruptions. China's move to curb shipments of critical minerals and magnets — vital to industries from electric vehicles to defence — highlights its strategic leverage in the intensifying trade conflict with the U.S.

Currency Market Commentary

The South African rand declined on Tuesday following Q1 GDP data that, while slightly exceeding expectations, confirmed economic stagnation. The British pound remained largely steady against the dollar and euro, awaiting a series of Bank of England speeches and a long-dated government bond auction that could signal investor sentiment on UK fiscal health. Meanwhile, the U.S. dollar eased on Wednesday as markets awaited U.S. employment data and monitored developments in President Trump’s tariff negotiations. The administration set a Wednesday deadline for trade partners to submit their best offers, coinciding with the scheduled doubling of steel and aluminium tariffs to 50%.

British American Tobacco p.l.c. (BTI) +1.75%

British American Tobacco reports that it remains on track to meet full-year guidance, with revenue tracking slightly ahead of expectations. U.S. operations are set to return to revenue and profit growth in H1 and FY25, driven by resilient performance in Combustibles and accelerating momentum in Velo Plus. Velo continues to lead the global Modern Oral segment, helping to mitigate pressure from illicit Vapour products in North America. The AME region reports strong results, while APMEA contends with excise and regulatory headwinds in Bangladesh and Australia. Management expects an uplift in New Category revenue in H2 alongside improved margins and remains confident in achieving its mid-term targets of 3–5% revenue and 4–6% APFO growth by 2026. Financial flexibility has been enhanced through the partial monetisation of its ITC stake, supporting deleveraging and an increased £1.1 billion share buy-back for 2025.

Hudaco Industries Limited (HDC) +0.05%

Hudaco has announced the acquisition of the trading assets and liabilities of Flosolve Proprietary Limited, effective 1 June 2025, for a maximum consideration of R125 million, including an upfront payment of R45 million funded through internal resources. Flosolve, which supplies specialised equipment for fuel and lubricant handling primarily to the mining industry, employs 53 staff across Gauteng and Middelburg. The transaction aligns with Hudaco’s strategic focus on bolt-on acquisitions within adjacent markets and enhances its engineering consumables portfolio. The integration is expected to unlock synergies with existing Hudaco divisions, expand customer reach, and benefit from the group’s value-added distribution model. While not categorised as a material transaction under JSE requirements, the board opted to voluntarily inform shareholders.

Wesizwe Platinum Limited (WEZ) +2.27%

Wesizwe Platinum’s shares have been suspended from trading on the JSE as of 3 June 2025, due to the company’s failure to publish its Audited Annual Financial Statements, Integrated Annual Report, and Notice of AGM for the financial year ended 31 December 2024 within the regulatory timeframe. As a result, investors are temporarily unable to trade in the company’s securities. Wesizwe is working closely with its auditors and is targeting publication of all outstanding documentation by 31 July 2025. Upon completion, the company intends to request the lifting of the suspension and will continue to update shareholders on progress.

Hewlett Packard Enterprise Company (HPE) +2.02%

Hewlett Packard Enterprise surpassed Wall Street’s Q2 revenue and profit expectations, driven by strong demand for its AI servers and hybrid cloud offerings. Despite a $1.36 billion impairment charge, shares rose 3.2% in after-hours trading. The company reported $7.63 billion in revenue versus the $7.45 billion consensus, with server revenue up 5.7% to $4.06 billion and hybrid cloud revenue growing 13% to $1.45 billion. Adjusted EPS of 38 cents beat estimates of 32 cents. HPE narrowed its full-year revenue growth forecast to 7–9% from 7–11%, citing ongoing macroeconomic and geopolitical challenges but remains prepared to act to meet its fiscal 2025 targets. It also issued Q3 revenue guidance of $8.2–8.5 billion, above the $8.17 billion consensus.

CrowdStrike Holdings Inc. (CRWD) +2.00%

CrowdStrike projected second-quarter revenue slightly below Wall Street estimates, reflecting cautious government and enterprise spending amid higher interest rates and persistent inflation. Despite growing cybersecurity threats, clients have curtailed tech investments, pressuring demand. The company reported Q1 revenue of $1.10 billion in line with estimates and adjusted EPS of 73 cents, down from 79 cents a year prior. CrowdStrike anticipates Q2 revenue between $1.14 billion and $1.15 billion versus consensus of $1.16 billion, with free cash flow expected to be reduced by approximately $29 million due to outage-related costs. The board approved a new share buyback programme of up to $1 billion.

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