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MARKET COMMENTARY

LOCAL MARKET COMMENTARY

On the stock market, both the Top 40 index and the broader All Share index fell by about 0.4% on Friday, ending the day at 73,729 and 80,797 points, respectively. South Africa's state power company Eskom is expected to report a 15 billion rand ($823 million) annual loss, mainly because it spent 33 billion rand on diesel to power gas turbines. Eskom, which had a 23.2 billion rand loss in 2023, will release its financial results for the year ending in March later this year, according to the Financial Times.

EUROPEAN MARKET COMMENTARY

European shares fell on Friday due to losses in bank and energy stocks as investors grew cautious before the second round of the French parliamentary elections. The pan-European STOXX 600 index dropped 0.2% after hitting a one-week high earlier in the day, but still gained 1% for the week. French markets have been pressured since President Macron called for a snap election, with fears of a far-right win raising concerns about fiscal stability.

US MARKET COMMENTARY

Wall Street stock indexes closed higher on Friday, with the tech-focused Nasdaq and the S&P 500 reaching record highs. This rally was driven by expectations of interest rate cuts as early as September, following new data showing a weakening U.S. labour market. Key stocks like Microsoft surged nearly 1.5%, closing at a record high. The Labor Department reported slower job growth in June, a rise in the unemployment rate to a 2.5-year high, and slowing wage gains.

ASIA MARKET COMMENTARY

Asia-Pacific markets opened mixed this morning as investors awaited key economic data from China later this week. China's inflation figures on Wednesday will indicate the state of the country's economic recovery. Japan's Nikkei 225 fell slightly, and the Topix dropped 0.36% as real wages declined for the 26th consecutive month, despite a 1.9% rise in nominal wages in May. South Korea's Kospi hovered near the flatline, while the small-cap Kosdaq rose 0.86%, with Samsung Electronics shares up 0.46% despite an upcoming union strike.

CURRENCY MARKET COMMENTARY

South Africa's rand gained strength against a weaker dollar on Friday due to expectations that the Federal Reserve will cut interest rates later this year. The U.S. dollar remained slightly lower after data showed slower job growth and a higher unemployment rate in June, supporting the idea that the Federal Reserve might start reducing interest rates in September.

COMMODITY MARKET COMMENTARY

Gold prices eased this morning but remained close to a one-month high reached in the previous session, following weaker U.S. data that raised expectations of a Federal Reserve interest rate cut in September. Oil prices were largely unchanged as investors watched for energy supply disruptions, with Texas' largest ports closed ahead of Tropical Storm Beryl, which is expected to strengthen into a hurricane and make landfall today.

LOCAL COMMENTARY

City Lodge Hotels Limited (CLH) -2.39%

Notice is hereby given that, following a special resolution passed at the Company's annual general meeting on 23 November 2023, the Board has approved providing financial assistance to current or future subsidiaries and related entities. This assistance, which may include guarantees, loans, or other support, exceeds one-tenth of 1% of the Company’s net worth. The Board has confirmed that after considering the Company’s financial situation, the Company remains solvent and liquid, the assistance complies with the Company’s rules, and the terms are fair and reasonable.

Trematon Capital Investments Limited (TMT) +0.00%

Shareholders should be aware that the Company is in talks about a potential sale that could significantly impact the stock price. Until there is a further update or the cautionary notice is lifted, shareholders are advised to be cautious when trading the Company's securities.

TeleMasters Holdings Limited (TLM) +0.00%

TeleMasters' two largest shareholders are in talks with a BEE company interested in buying their shares, but the deal depends on meeting certain conditions and regulatory approvals. If an offer is made and accepted, it will change TeleMasters' control and trigger a mandatory offer to all remaining shareholders. Additionally, TeleMasters is exploring a significant acquisition that would need shareholder and regulatory approvals.

INTERNATIONAL COMMENTARY

Foxconn Industrial Internet Company Limited Class A (601138) -0.70%

Taiwan's Foxconn, the world's largest contract electronics maker and Apple's biggest iPhone assembler, reported better-than-expected quarterly revenue driven by strong demand for AI servers, including those for Nvidia. Foxconn expects continued growth in the current quarter, with revenue for this year's third quarter projected to rise both year-on-year and from the previous quarter. In June, Foxconn's revenue was T$490.7 billion ($15.12 billion), up 16.1% year-on-year. For the second quarter, revenue reached a record high of T$1.55 trillion, a 19.1% increase year-on-year, surpassing expectations. This growth was primarily due to strong performance in its cloud and networking products segment. However, revenue from smart consumer electronics, including smartphones, remained flat year-on-year. Foxconn's shares have surged 105% this year, outperforming the broader Taiwan market, and closed flat on Friday. The company will announce its second-quarter earnings on August 14.

Deutsche Lufthansa AG (LHA) +0.63%

Lufthansa reassured investors about ITA's financial health on Friday after gaining EU approval to buy 41% of the Italian airline, which is still overshadowed by its predecessor Alitalia. ITA Airways, launched in 2021, has been working to move past Alitalia's troubled history, which involved burning through around 10 billion euros ($10.8 billion) in state funds over 14 years. Lufthansa, which has also faced financial challenges, including a recent profit warning due to unexpected strike costs and pandemic-related government assistance, emphasized ITA's potential for recovery and growth.

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About the Author

Research Team
Media, Sasfin Wealth

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