Berkshire Edges Lower After Kraft Heinz Write-Down and Softer Earnings

South Africa

The Top 40 index added 1.84% yesterday to reach 91,801.9 points, while the All Share index posted a 1.60% gain to close at 99,312.1 points. South Africa is finalising a response package to mitigate the economic fallout from new US tariffs, which impose a steep 30% duty on its exports—affecting an estimated 30,000 jobs. In parallel, the government is intensifying efforts to diversify trade, expanding into Asian and Middle Eastern markets and boosting its Exporter Development Programme. A memorandum on industrialisation with China is also under negotiation. While South Africa exported $14.7 billion to the US last year, analysts caution that substituting lost access to the US market will take time, posing risks to growth, employment, and external balances in the near term.

Europe

European equities rebounded, with the STOXX 600 rising 0.9%, led by banks, offsetting declines in Swiss stocks after the US imposed a 39% tariff on Swiss imports. Switzerland, shocked by the measures, signalled willingness to renegotiate with Washington to protect key exports—pharmaceuticals, watches, and machinery. The duties, effective this Thursday, heighten inflationary and economic slowdown risks in Europe, exacerbating volatility. Investors are closely watching for potential retaliatory measures and the impact on EU-US trade dynamics. Broader European equity sentiment remains fragile, having retreated from recent highs amid escalating global trade tensions and uncertain macroeconomic signals.

United States

US markets posted their strongest daily gains since May, driven by bargain hunting and renewed bets on a September rate cut, following soft July labour data. Odds of a rate cut now exceed 80%, with two cuts expected by year-end. Tesla rose 2.2% after awarding Elon Musk $29 billion in shares. Meanwhile, trade tensions continue, as the US targets Indian imports due to its Russian oil dealings. The S&P 500 and Nasdaq remain near record levels despite macro headwinds. Investors are eyeing upcoming earnings, particularly from Disney, for further clarity on corporate resilience amid shifting monetary and trade policies.

Asia

Asian equities climbed for a second day, buoyed by signs of improving Chinese service-sector momentum—PMI rose to 52.6, a 14-month high—reflecting rising export demand. South Korea’s inflation slowed slightly to 2.1% year-on-year, while the monthly rise accelerated to 0.2%. Minutes from the Bank of Japan suggest policymakers may consider rate hikes once US trade uncertainty eases, aided by Tokyo’s new deal with Washington. The mixed regional data underscore an uneven recovery trajectory, though strengthening demand in China offers some optimism. Investors remain focused on inflation trends and trade developments, especially given the potential spillover from US tariff actions.

Currencies

The rand edged higher on Monday, supported by firm gold prices, as markets processed weak US job data and anticipated fresh tariff developments. The dollar softened broadly on Tuesday, pressured by rising expectations of a September Federal Reserve rate cut. The euro held at $1.1579, while sterling stood at $1.3298. The dollar index dipped to 98.688, its lowest in a week. Market sentiment remains fragile, with monetary policy divergence and trade volatility driving short-term FX positioning. Investors are increasingly pricing in dovish Fed moves, even as other central banks signal tightening or hold steady amid persistent inflation pressures.

Commodities

Gold extended its rally for a fourth session, supported by a weaker dollar and falling Treasury yields as disappointing US jobs data lifted rate cut expectations. Oil steadied after three days of losses despite OPEC+ announcing a 547,000 bpd output hike for September—reversing earlier cuts. Analysts note that actual supply increases may be limited. Simultaneously, geopolitical risks persist, as Washington pressures India to curtail Russian oil imports, raising concerns over potential disruptions. The delicate balance between oversupply fears and geopolitical uncertainty continues to shape near-term pricing. Investors should monitor both OPEC+ compliance and evolving US-India energy relations.

FirstRand Limited (FSR) +2.44%

FirstRand provided an update following the UK Supreme Court ruling, which upheld its key appeal that motor dealers do not owe customers a fiduciary duty—invalidating claims of bribery and dishonesty. While one case (Johnson) was ruled an unfair relationship under s140A of the Consumer Credit Act, the court stressed outcomes depend on case-specific facts. The FCA is preparing a redress scheme, with implementation expected in 2026. FirstRand estimates only 4% of agreements involved commission levels like Johnson’s, suggesting limited exposure. However, a provision update may be required, potentially lowering full-year earnings growth toward the lower end of guidance.

Mpact Limited (MPT) +3.28%

Mpact reported resilient unaudited interim results for the six months ended 30 June 2025, with net asset value per share up 5% to R35.85. Revenue grew 3% year-on-year to R6.4 billion, supported by ongoing progress in strategic initiatives and portfolio optimisation. EBITDA reached R625 million, with underlying operating profit of R315 million. Headline earnings per share came in at 93 cents, reflecting continued operational efficiency. The board declared an interim dividend of 30 cents per share. The Group maintains a stable financial position and remains focused on value creation through disciplined capital allocation and targeted strategic execution.

Gold Fields Limited (GFI) +8.71%

Gold Fields expects headline earnings per share (HEPS) for H1 2025 to rise 203–236% year-on-year to between US$1.09 and US$1.21, driven by higher gold volumes sold and stronger realised prices. Basic EPS and normalised earnings are also forecast to increase significantly, with normalised EPS up 165–195% versus H1 2024. Cost pressures from mining inflation and higher volumes were partially offset by revenue gains. Gold output is set to improve further in H2 2025 with ramp-up at Salares Norte and increased production from Gruyere, St Ives, and Tarkwa. Full results will be released on 22 August 2025.

Impala Platinum Holdings Limited (IMP) -0.1%

Impala Platinum reported a 3% decline in total 6E production to 3.55Moz for FY2025, citing lower volumes across several operations. Managed output fell 4%, with Marula (-10%), Zimplats (-6%), and Impala Canada (-15%) impacted by operational constraints, commissioning delays, and lower grades. JV output declined 1%, while third-party concentrate receipts rose 9%. Despite volume pressures, easing input inflation and a stronger rand supported unit costs. Group capex declined as key projects concluded, and positive free cash flow drove an improved net cash position. Full audited results are expected on or about 29 August 2025.

Berkshire Hathaway Inc. (BRK.A) -2.65%

Berkshire Hathaway’s Class A shares fell over 3% after announcing a $3.8bn write-down on its 27.4% stake in Kraft Heinz, reflecting continued value erosion in a key portfolio holding. Operating income declined 4% year-on-year, with weaker underwriting premiums and tariff-related disruptions weighing on performance. The group has paused share buybacks since May and remains cautious on valuations amid macro uncertainty. While the stock is up 2% YTD, it lags the S&P 500. Investor sentiment has softened since Buffett confirmed his upcoming exit as CEO, with succession to Greg Abel raising questions about strategy and capital deployment under new leadership.

Tesla Inc.(TSLA) +2.19%

Tesla granted CEO Elon Musk a $29bn share award to retain his leadership as the company shifts towards robotaxis and AI-driven robotics. The interim award—96 million shares priced at $23.34—responds to the voided 2018 pay deal and hinges on Musk staying in a senior role for two years. The board plans a broader compensation vote in November. Despite declining vehicle sales, rising competition, and reputational risks tied to Musk’s political activity, the board reinforced confidence in his strategic vision. If fully exercised, Musk’s stake would exceed 15%. The move underscores Tesla’s dependence on Musk amid its structural transformation.

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