Constellation Warns on 2026 Earnings as Tariffs Bite and Wine Sales Slump

Local Market Commentary

The JSE Top 40 fell 2.01% to 75,690.6 points, while the All Share index declined 2.07% to 82,485.8, reflecting broad market weakness. Politically, tensions within the Department of Public Works and Infrastructure appear to be easing, with Deputy Minister Sihle Zikalala affirming the constitutionality of the Land Expropriation Act and its alignment with property rights. On the corporate front, EasyEquities’ move to introduce platform fees for dormant accounts appears justified, as the group reported a 63% rise in net inflows to R5.31 billion for the six months ending February.

European Market Commentary

European equities extended losses on Wednesday, with the STOXX 600 plunging 3.5%—now over 16% below its March peak and nearing bear market territory—amid escalating US-China trade tensions and fresh tariff threats from President Trump targeting healthcare. Germany’s DAX dropped 3%, while rate-sensitive banking stocks fell 3.1% as markets fully priced in a European Central Bank rate cut next week. The EU announced 25% tariffs on a range of US goods in response to newly imposed levies, heightening economic uncertainty. ECB officials reaffirmed their readiness to support financial stability amid rising risks to euro area growth.

U.S. Market Commentary

The S&P 500 surged 9.5% on Wednesday—its strongest single-day gain since 2008—after President Trump announced a 90-day pause on many tariffs, easing market fears over escalating trade tensions. While tariffs on Chinese imports were hiked to 125%, the temporary relief for other countries prompted Goldman Sachs to withdraw its recession forecast and return to a baseline growth outlook for 2025. Additional support came from a well-received $39 billion 10-year Treasury auction and the release of Fed minutes, which highlighted policymakers’ concerns over potential stagflation and the prospect of challenging policy trade-offs ahead.

Asia Market Commentary

Asia-Pacific equities advanced this morning, tracking Wall Street’s strongest rally since 2008 following President Trump’s 90-day tariff pause for all countries except China. However, economic signals from the region remained mixed—China’s consumer prices declined 0.1% year-on-year in March, marking a second consecutive month of deflation, while producer price deflation deepened amid trade war concerns. In Japan, the corporate goods price index rose 4.2%, exceeding expectations and reflecting ongoing cost pressures from elevated raw material prices, which continue to challenge corporate margins amid global trade uncertainty.

Currency Market Commentary

The rand hit an all-time low on Wednesday, driven by concerns over escalating U.S.-China trade tensions and political instability in South Africa. Meanwhile, the U.S. dollar rebounded against safe-haven currencies such as the yen and Swiss franc following Trump’s announcement of a 90-day pause on many tariffs, though tensions with China were heightened by increased duties on Chinese imports. This dynamic led to renewed demand for the yen and Swiss franc, while the Australian dollar faced selling pressure as traders adjusted to the evolving trade conflict.

Commodity Market Commentary

Gold climbed over 1% this morning as heightened U.S.–China trade tensions drove safe-haven demand, with investors reacting to Washington’s tariff hike on Chinese goods despite a 90-day reprieve for other countries. Oil prices eased as markets weighed the broader economic implications of the trade escalation. Supply-side dynamics added complexity: the Keystone pipeline remained offline after a spill, while the Caspian Pipeline Consortium resumed partial operations following a Russian court ruling. Meanwhile, U.S. crude inventories rose by 2.6 million barrels last week—well above forecasts—further pressuring oil benchmarks.

Alphamin Resources Corporation (APH) +24.22%

Alphamin Resources has initiated a phased resumption of operations at its Bisie tin mine in North Kivu Province, Democratic Republic of the Congo, following the withdrawal of insurgents from the region. The decision to restart production comes after the orderly evacuation of personnel in March 2025, with care and maintenance activities continuing without disruption. The mine is adequately stocked with necessary supplies for the phased restart, with Q1 2025 production reaching 4,270 tonnes before security concerns halted operations. Between January 1 and April 8, 2025, Alphamin exported around 4,500 tonnes of contained tin, with approximately 280 tonnes still in transit. The company expects to release its audited financial results for the year and quarter ending December 31, 2024, on or about April 17, 2025.

Purple Group Limited (PPE) -6.60%

Purple Group reported its strongest half-year performance, driven by scalable revenue growth, improved platform efficiency, and enhanced client engagement. Group revenue rose by 25.8% to R238 million, with operating expenses increasing by only 13%, underscoring strong cost discipline. Profit attributable to ordinary shareholders surged by 208.5% to R33.5 million, while earnings per share climbed by 204.1% to 2.36 cents. Easy Group was a key contributor, with a 30.8% revenue increase to R216.4 million and a 238.3% rise in profit after tax to R39.8 million. Retail client assets under management grew by 31.4% to R67.2 billion, and retail inflows surged by 63.3% to R5.31 billion. The company demonstrated impressive scalability, with average revenue per user rising 24%, while the cost-to-serve per client increased just 4.9%. CEO commentary highlighted the strategic decisions behind the growth, positioning Purple Group for continued success despite macroeconomic uncertainty.

Constellation Brands Inc. (STZ) +7.28%

Constellation Brands issued a cautious outlook for fiscal 2026, projecting adjusted earnings per share between $12.60 and $12.90—well below the $13.97 consensus—due to anticipated tariff-related pressures from recent US and Canadian measures. The company, heavily reliant on its beer segment which contributed 82% of FY2024 revenue, also trimmed its medium-term net sales guidance and expects flat to slightly negative growth in organic enterprise sales. Additionally, it foresees a potential full-year earnings wipeout in its wine and spirits division, reflecting heightened cost pressures and softer demand expectations.

Volkswagen AG (VOW) -2.15%

Volkswagen reported a sharp decline in Q1 operating profit to €2.8 billion, significantly below the €4 billion market consensus, citing factors including US tariff uncertainty, diesel-related provisions, and regulatory costs. The company attributed a €300 million hit to tariff-related vehicle valuation adjustments and a further €600 million to provisions for EU carbon compliance, which may ease pending regulatory clarity. Despite the headwinds, including a €200 million software unit restructuring charge, VW maintained its full-year guidance for up to 5% sales growth and an operating margin between 5.5% and 5.6%, while noting that tariff impacts are not yet factored into this outlook.

Delta Air Lines Inc. (DAL) +23.38%

Delta Air Lines withdrew its 2025 financial guidance and issued a weaker-than-expected Q2 earnings forecast, citing a sharp slowdown in travel demand amid heightened economic uncertainty driven by US tariffs. The carrier now expects Q2 EPS between $1.70 and $2.30, below the $2.30 consensus, and guided for flat to slightly negative year-on-year revenue growth. In response, Delta will delay tariff-affected aircraft deliveries and reduce capacity to safeguard margins. While domestic travel demand has softened across both leisure and corporate segments, international and premium bookings remain resilient. Despite recent reassurances, shares are down 37% year-to-date.

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