Exxon Mobil Warns of Q2 Earnings

LOCAL MARKET COMMENTARY

The Top 40 Index, as well as the All Share Index on the stock market, remained mostly unchanged, both closing down 0.02% and ending Monday at 73,717 and 80,783 points, respectively. AutoZone, the largest privately owned automotive parts retailer and wholesaler in southern Africa, is facing financial difficulties and has entered voluntary business rescue. Meanwhile, South Africa's new energy minister vowed on Monday to accelerate the shift to renewable energy from coal, departing from a predecessor who opposed swift decarbonization and pledged to continue burning coal for a long time.

EUROPEAN MARKET COMMENTARY

European shares were flat on Monday as investors considered the possibility of a hung parliament in France following a surprising advance by the left alliance in the election. The pan-European STOXX 600 index ended at 516.43 points, with the oil and gas sector down 1.1% due to falling crude prices. French stocks fell by 0.6% amid challenging government formation talks after a left-wing surge blocked the far right. In Germany, exports dropped more than expected in May due to weak demand from China, the U.S., and Europe.

US MARKET COMMENTARY

The S&P 500 and Nasdaq reached record highs on Monday as investors anticipated new inflation data, comments from Federal Reserve Chair Jerome Powell, and the start of the quarterly earnings season. Nvidia rose nearly 2%, Intel surged over 6%, and Advanced Micro Devices gained 4%, boosting the Philadelphia semiconductor index by 1.9%. Traders are looking forward to consumer price data on Thursday and producer price data on Friday to assess the Fed's inflation efforts.

ASIA MARKET COMMENTARY

Asia-Pacific markets had a mixed opening this morning. Japan’s Nikkei 225 rose 1.11% and the Topix gained 0.38%. South Korea’s Kospi edged up 0.06% as Samsung Electronics shares increased by 0.57%, despite an ongoing union strike for better pay. Meanwhile, Hyundai avoided a strike with a tentative wage agreement, though its shares fell by 1.59%. Hong Kong’s Hang Seng Index dropped 0.2%, and the CSI 300 declined by 0.15%.

CURRENCY MARKET COMMENTARY

The South African rand strengthened on Monday as improved risk sentiment fuelled bets that a U.S. Federal Reserve interest rate cut is near. Meanwhile, the U.S. dollar remained near a multi-week low this morning following Friday's unexpectedly weak jobs report, with traders eagerly awaiting testimony from Federal Reserve Chair Jerome Powell for insights on future interest rate decisions.

COMMODITY MARKET COMMENTARY

Gold prices edged up this morning following a sharp drop the previous day, as investors looked forward to Federal Reserve Chair Jerome Powell's testimony before Congress and June inflation data to gauge the central bank's next policy moves. Meanwhile, oil prices continued to decline after a hurricane in Texas caused less damage than anticipated, reducing supply concerns.

Accelerate Property Fund Limited (APF) +0.00%

Shareholders were previously informed on 11 June 2024 that APF planned to sell Cherry Lane Shopping Centre in Pretoria. However, the sale to QSPACE (Pty) Limited has been terminated. The company is now in discussions with other potential buyers and will provide updates through SENS if an agreement is reached.

Exxon Mobil Corporation (XOM) -1.05%

Exxon Mobil announced on Monday that lower natural gas prices and refining margins are expected to impact its second-quarter earnings. This will be its first earnings report after acquiring Pioneer Natural Resources for $60 billion, making it the largest oil producer in the Permian basin. Exxon stated that changes in gas prices could reduce its quarterly upstream earnings by $300 million to $700 million compared to the first quarter. Natural gas prices fell due to lower demand forecasts, high output, and excess inventories. However, higher crude prices are expected to increase oil earnings by at least $300 million. Exxon's first-quarter upstream earnings were $5.7 billion. Additionally, lower refining margins could negatively affect second-quarter profits by $1.1 billion to $1.5 billion. Exxon shares, which have risen about 13% this year, were down 1.3% in pre-market trading. Analysts expect the company to post an adjusted per share profit of $2.37.

Grifols, S.A. Class A (GRF) +9.70%

The Grifols family and Canadian fund Brookfield are considering a joint takeover bid to delist struggling Spanish drugmaker Grifols. Grifols' board held a special meeting to review Brookfield's preliminary offer, with the family owning about 30% of the company. Grifols' debt rose to 10.9 billion euros in the first quarter. Following the news, Grifols' shares jumped 9.7%. The deal could be worth around 5.5 billion euros, while the company’s market capitalization is 6.2 billion euros. Earlier this year, Gotham City Research accused Grifols of overstating earnings and understating debt.

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