Shell Eyes BP Takeover but Holds Back for Now

Local Market Commentary

The South African Top 40 index gained 0.61% on Friday, closing at 84,737.2 points, while the All Share index rose 0.82% to 92,332.6 points. South Africa’s seasonally-adjusted Absa Manufacturing PMI fell to 44.7 in April from 48.7 in March, marking its sixth consecutive month below the 50-point threshold and signalling ongoing contraction in industrial activity. Survey responses highlighted rising concern over global trade tensions and domestic political uncertainty. In the automotive sector, April data presented a mixed picture: local vehicle sales rose 11.9% year-on-year, while exports declined by 6.6%, underscoring external demand weakness despite resilient domestic consumption.

European Market Commentary

European equities closed the week on a strong note, with the STOXX 600 rising 1.7% on Friday, buoyed by easing US-China trade tensions and a solid US jobs report that lifted risk appetite. The index regained levels last seen on 2 April, prior to market disruption from the US administration's tariff threats. Despite euro zone inflation exceeding expectations, the ECB is still anticipated to proceed with rate cuts. Notably, Danske Bank delivered better-than-expected Q1 results and cited limited trade war impact on its Nordic markets, where economic resilience continues to support sentiment.

U.S. Market Commentary

US equities advanced on Friday, marking a second straight weekly gain as upbeat April jobs data (177,000 jobs added; 4.2% unemployment) and signs of easing US-China trade tensions helped ease recession concerns stemming from a Q1 GDP contraction. Apple slid nearly 4% after trimming its share buyback by $10bn and warning of $900m in tariff-related costs. Block plunged 20% on a 2025 profit downgrade, while Take-Two fell 7% after delaying GTA VI to May 2026. Meta (+4.3%) and Nvidia (+2.6%) led tech gains; Amazon edged down 0.1%. Energy majors Chevron (+1.6%) and ExxonMobil (+0.4%) rose on solid earnings.

Asia Market Commentary

Japan’s finance minister Katsunobu Kato clarified on Sunday that Tokyo has no intention of leveraging its $1tn+ US Treasury holdings in trade negotiations, stating his earlier remarks were a hypothetical response rather than a policy signal. Meanwhile, Ant Group is reportedly in early-stage talks with regulators for a potential Hong Kong IPO of its overseas arm, Ant International, according to Caixin. In macro data, Hong Kong’s economy expanded 3.1% y/y in Q1 2025, outpacing expectations (2.1%) and marking a ninth consecutive quarter of growth, driven by resilient domestic activity.

Currency Market Commentary

The South African rand rose on Friday, buoyed by optimism surrounding a potential easing of US-China trade tensions and stronger-than-expected US jobs data that helped lift global risk sentiment. However, the dollar weakened on Monday, driven by a sharp rally in the Taiwanese dollar, sparking speculation that some Asian nations may consider currency revaluations to secure trade concessions from the US. In a TV interview, President Trump reiterated his belief that China sought a trade deal but provided no further details or timeline. He also dismissed the idea of removing Federal Reserve Chair Jerome Powell but reiterated calls for lower interest rates. The Fed's policy decision on Wednesday is expected to leave rates unchanged, following solid March payrolls.

Commodity Market Commentary

Gold prices edged higher on Monday, supported by a weaker dollar and investor caution ahead of the upcoming U.S. Federal Reserve policy decision and unresolved global trade tensions. In contrast, Brent and WTI crude fell over $2 per barrel, hitting their lowest since 9 April, as OPEC+ announced an accelerated output hike of 411,000 bpd for June — lifting total increases over April–June to 960,000 bpd, or 44% of previously agreed cuts. Meanwhile, geopolitical risks intensified as Israel vowed retaliation against Iran following a missile attack by Tehran-backed Houthis, with Iran warning it would respond if provoked by the U.S. or Israel.

Supermarket Income REIT plc (SRI) +1.26%

Supermarket Income REIT plc (LSE: SUPR) has finalised a £90 million unsecured debt facility with Barclays, refinancing £85.4 million in near-term secured maturities with Wells Fargo and Bayerische Landesbank. The new three-year, interest-only facility—featuring two one-year extension options at the lender’s discretion—is priced at SONIA +1.55%, with an effective 5.0% interest rate cap maintained through existing hedges at no incremental cost. The refinancing, together with the recent joint venture, reduces balance sheet risk and delivers a pro-forma LTV of approximately 31%, reinforcing the Company’s capacity to secure attractively priced capital against the backdrop of a resilient, income-generating asset base.

Kore Potash plc (KP2) +3.13%

Kore Potash plc (AIM/ASX/JSE: KP2) has been suspended from trading on the ASX after failing to meet disclosure requirements relating to a draft non-binding financing Term Sheet from the Summit Consortium for the Kola Project. While the ASX views the received documentation as announceable, ongoing review and negotiation have delayed publication, triggering suspension under Listing Rule 17.3. The Term Sheet allows engagement through to 31 May 2025. Trading continues as normal on AIM and the JSE, where the earlier trading halt has been lifted. JSE shareholders are advised to exercise caution, given the potential for material impact from the eventual terms.

Shell Plc (SHEL) +2.05%

Shell Plc is reportedly working with advisers to assess a potential acquisition of BP Plc, but is awaiting further declines in stock and oil prices before making a final decision, according to Bloomberg News. While discussions around the feasibility of a takeover have intensified in recent weeks, Shell’s CEO, Wael Sawan, stated that he would prefer to buy back more Shell stock, adding that the company must focus on its own operations before pursuing major acquisitions. A merger with BP would significantly increase Shell's scale, potentially challenging rivals like Exxon and Chevron, though it would likely face regulatory scrutiny. Shell recently reported strong Q1 results and initiated a $3.5 billion share buyback, with any move towards BP’s acquisition possibly contingent on further price drops or actions from other potential buyers.

Chevron Corporation (CVX) +1.64%

Chevron reported first-quarter earnings of $3.8 billion, or $2.18 per share, in line with Wall Street expectations, though it indicated a reduction in share repurchases for the current quarter due to a challenging economic outlook. The company has revised its share repurchase guidance to between $11.5 billion and $13 billion for the year, compared to the original $10 billion to $20 billion target. Chevron also paid $3 billion in dividends and repurchased $3.9 billion of shares in Q1. Looking ahead, the company plans to repurchase $2 billion to $3.5 billion in shares during Q2. Additionally, Chevron is defending its $53 billion acquisition of Hess, which would expand its presence in Guyana’s oilfields, despite facing challenges from Exxon and CNOOC in arbitration.

Exxon Mobil Corporation (XOM) +0.41%

Exxon Mobil surpassed Wall Street's earnings expectations for Q1, posting a profit of $7.71 billion, or $1.76 per share, against analyst estimates of $1.73 per share. The increase in earnings was driven by higher oil and gas production from Guyana and the Permian Basin. The company repurchased $4.8 billion in shares and paid out $4.3 billion in dividends during the quarter, keeping it on track to meet its $20 billion annual buyback target. Exxon maintains its capital expenditure guidance for 2025, ranging from $27 billion to $29 billion. Oil and gas production reached 4.55 million boepd, up from 3.78 million boepd in Q1 2024. However, refining profits decreased to $827 million from $1.38 billion a year ago.

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