Disney Surpasses Expectations with Profitable Streaming Services

LOCAL MARKET COMMENTARY

On the Johannesburg Stock Exchange, the blue-chip Top 40 index and the broader All Share index both ended the day up about 1.2%, closing at 73,357 and 80,365 points, respectively. South Africa's net foreign reserves increased to $59.165 billion at the end of July from $58.437 billion in June, according to central bank data. The JSE reported stable results for the first half of its financial year, with a net profit after tax of R493 million and headline earnings per share of 606 cents. Impala Platinum expects lower earnings for its recently concluded fiscal year, impacted by a decline in the dollar price of platinum group metals.

EUROPEAN MARKET COMMENTARY

Europe's main stock index saw its biggest one-day gain since November, driven by a strong comeback by banks, despite a drop in Novo Nordisk's shares after it lowered its full-year profit outlook. German industrial production rose more than expected in June, following positive industrial orders, providing some optimism for Europe's largest economy amid recession concerns. Italy's Economy Minister, Giancarlo Giorgetti, announced no plans for additional taxes on bank profits. European Central Bank policymaker Olli Rehn indicated that rate cuts could continue if confidence in slowing inflation grows.

US MARKET COMMENTARY

U.S. stocks ended lower on Wednesday, with the Nasdaq falling 1% due to a decline in technology shares and weak demand in a 10-year Treasury auction, which caused investor jitters. The indexes started strong with a surge in tech shares but lost momentum in the afternoon. Investors remain nervous following a recent steep selloff in global stocks and are concerned about a possible U.S. recession and weaker forecasts from major companies. Markets are also anticipating further commentary on monetary policy from U.S. central bank officials ahead of the Jackson Hole event, where Fed Chair Jerome Powell will speak.

ASIA MARKET COMMENTARY

Asia-Pacific markets were lower this morning as investors assessed trade data from Japan and awaited India's interest rate decision. The Reserve Bank of India is expected to maintain its rate at 6.5% for the ninth consecutive meeting. Japan's current account for June was 1.533 trillion yen ($10.2 billion), falling short of the expected 1.789 trillion yen. The Bank of Japan's summary of opinions from their July meeting revealed proposals for more rate hikes, suggesting the neutral rate should be at least 1%, and emphasizing the need for timely and gradual rate increases. However, BOJ Deputy Governor Shinichi Uchida stated on Wednesday that due to recent shocks to stock prices and foreign exchange rates, the bank should continue its monetary easing with the current policy interest rate.

CURRENCY MARKET COMMENTARY

The South African rand gained on Wednesday as a rebound in global stock markets improved risk sentiment, with investors looking ahead to U.S. labour market data for indications on future interest rate decisions. The dollar index, which measures the U.S. dollar against a basket of currencies including the yen and the euro, rose 0.2% to 103.19, while the euro fell 0.08% to $1.0921.

COMMODITY MARKET COMMENTARY

Gold prices edged higher this morning, supported by rising expectations of a U.S. interest rate cut and ongoing tensions in the Middle East. Traders are also awaiting economic data for clues on the Federal Reserve's policy direction. Oil prices increased for the third consecutive session after government data revealed a significant reduction in U.S. crude stockpiles, recovering from multi-month lows earlier this week.

JSE Limited (JSE) -1.67%

For the six months ending on June 30, 2024, the company reported a revenue of R1,476 million, a 4.3% increase from H1 2023. Operating income rose by 4.2% to R1,537 million, and total income grew by 3.3% to R1,563 million. Personnel expenses increased by 5.2% and other expenses by 7.9%, leading to a total expenditure rise of 6.4% to R1,010 million. Earnings before interest and tax (EBIT) slightly decreased by 2.1% to R553 million, while net finance income jumped 36.5%. Net profit after tax (NPAT) remained steady at R493 million, and earnings per share (EPS) saw a small increase of 0.7% to 606 cents. Despite a decrease in EBITDA margin and a slight drop in headline earnings per share (HEPS), net cash from operations rose by 3.0% to R503 million, with capital expenditure (CAPEX) decreasing by 12.1% to R29 million.

Glencore PLC (GLN) +2.62%

For the first half of 2024, the company reported a revenue of $117,091 million, up 9% from the same period in 2023. Adjusted EBITDA dropped 33% to $6,335 million, and adjusted EBIT fell 55% to $2,850 million. The company posted a net loss of $233 million, compared to a net income of $4,568 million in H1 2023. Basic earnings per share (EPS) shifted from $0.36 to a loss of $0.02. Funds from operations (FFO) increased by 9% to $4,037 million. As of June 30, 2024, total assets decreased by 3% to $120,690 million, total equity declined by 6% to $35,763 million, net funding dropped by 5% to $29,360 million, and net debt decreased by 26% to $3,648 million.

Impala Platinum Holdings Limited (IMP) +2.02%

Shareholders are informed that the Group expects both basic earnings per share (EPS) and headline earnings per share (HEPS) for the period to be lower than those of the previous period. Implats anticipates reporting a basic earnings loss between R16.9 billion and R17.8 billion, translating to an EPS loss of 1,883 to 1,984 cents per share, compared to a profit of R4.9 billion and 577 cents per share in the same period last year. The weighted average number of shares increased to 897.36 million from 850.28 million, and the total number of shares in issue rose to 904.37 million at the end of the period, up from 866.40 million on June 30, 2023, following the issuance of 37.97 million shares as part of the acquisition of Royal Bafokeng Platinum Limited.

MTN Group Limited (MTN) +3.44%

Shareholders are advised that MTN expects a significant decrease in earnings per share (EPS) and headline earnings per share (HEPS) for the first half of 2024. EPS is anticipated to drop by 175% to 185%, translating to a loss of between 434 cents and 383 cents per share, compared to the 511 cents reported for H1 2023. HEPS is expected to decrease by 140% to 150%, resulting in a loss of between 271 cents and 217 cents per share, compared to the 542 cents reported for H1 2023.

Walt Disney Company (DIS) -4.46%

Disney reported its fiscal third-quarter earnings on Wednesday, surpassing analyst expectations as its combined streaming businesses turned a profit earlier than anticipated. The company reported an adjusted earnings per share of $1.39, beating the expected $1.19, and revenue of $23.16 billion, slightly higher than the anticipated $23.07 billion. Total segment operating income rose 19% to $4.225 billion, driven by positive results from Disney's entertainment unit, especially streaming. The combined streaming business achieved an operating profit of $47 million, compared to a $512 million loss in the same quarter last year. However, excluding ESPN+, the direct-to-consumer streaming unit reported a $19 million loss. Overall revenue increased by 4% to $23.155 billion year-over-year. While the entertainment and sports divisions boosted earnings, the U.S. theme parks business faced challenges due to slowing consumer demand and inflation.

Monster Beverage Corporation (MNST) -0.53%

Monster Beverage missed market expectations for second-quarter sales, as budget-conscious consumers reduced spending on non-essential items like pricey energy drinks amid economic uncertainty. Higher costs of essentials such as food and fuel have led U.S. consumers to be more careful with their discretionary spending, affecting sales for companies like Monster. As a result, shares of the California-based company fell about 10% in after-hours trading. For the second quarter, Monster posted net sales of $1.90 billion, below the analysts' average estimate of $2.01 billion. The company reported a profit of 41 cents per share, compared to the expected 45 cents per share.

Do you prefer a full in-depth report you can read offline? Click here to download the full report.