Hewlett Packard lifts outlook as AI server and networking demand drives strong growth

South African Market Summary

The JSE All Share Index rose 0.17% to 116,785.77, while the Top 40 gained 0.36% to 108,993.29. President Cyril Ramaphosa confirmed the creation of the South African National Property Company, which will manage approximately R155 billion in state property assets, including 88,000 buildings and 5 million hectares of land, potentially forming the foundation of a future sovereign wealth fund. The entity will also redirect around R6 billion currently paid annually to private landlords towards state infrastructure development. Meanwhile, South African government bonds extended their sharpest sell-off since the pandemic, with the 10-year yield rising 36 basis points as higher oil prices and rand weakness raised inflation concerns.

European Market Summary

European equities declined to their lowest level in more than two months before trimming losses, with the STOXX 600 closing 0.6% lower after posting its worst weekly performance in nearly a year. The index now trades almost 6% below its February record as surging oil prices, driven by the escalating U.S.–Israeli conflict with Iran, intensified inflation concerns. European bond yields reached one-year highs as markets increased expectations for additional monetary tightening from the European Central Bank by mid-year. Meanwhile, G7 officials are considering a potential release of strategic oil reserves as Brent crude trades above $119 per barrel. Consumer sentiment in the UK and Europe weakened amid rising inflation risks.

US Market Summary

Wall Street equities recovered from earlier losses to close higher after a late-session rally, supported by comments from U.S. President Donald Trump suggesting the U.S.-Israeli conflict with Iran may end sooner than initially expected. Market attention now turns to key economic releases later this week, including the Consumer Price Index, revised fourth-quarter GDP and the Personal Consumption Expenditures report. Market breadth remained mixed, with declining stocks slightly outnumbering advancers on the NYSE, while gains led on the Nasdaq. Trading volumes reached 22.4 billion shares, above the 20-day average, reflecting heightened investor positioning amid geopolitical uncertainty and upcoming macroeconomic data.

Asian Market Summary

Asian equities advanced at the start of Tuesday’s session while oil prices declined sharply, following volatile global trading after U.S. President Donald Trump indicated the Middle East conflict could end soon. China’s trade momentum strengthened significantly, with exports rising 21.8% year-on-year in January–February, well above expectations and keeping the country on track to exceed a $1.2 trillion trade surplus in 2026. Meanwhile, South Korea’s economy contracted 0.2% quarter-on-quarter in Q4 2025, a milder decline than previously estimated. The mixed regional data highlights resilient external demand in China alongside continued cyclical softness in parts of Asia.

Currency Market Summary

The South African rand weakened sharply at the start of the week as investors reduced exposure to risk-sensitive assets amid surging oil prices and concerns about the potential inflationary impact of the escalating Middle East conflict. The currency came under pressure as global markets reassessed growth and inflation risks linked to higher energy costs. However, sentiment stabilised somewhat as the U.S. dollar eased following speculation that the conflict could be contained, which contributed to a pullback in oil prices and a modest recovery in risk assets.

Commodity Market Summary

Oil prices retreated on Tuesday after surging to their highest levels in more than three years during the previous session, as U.S. President Donald Trump suggested the Middle East conflict could end soon, easing fears of prolonged supply disruptions. Brent and WTI crude briefly traded near $119 per barrel amid production cuts and shipping disruptions linked to the U.S.-Israeli conflict with Iran. Output reductions from Iraq, Kuwait and Saudi Arabia intensified supply concerns before diplomatic signals helped stabilise markets. Meanwhile, gold prices moved higher, supported by a weaker dollar and expectations that easing energy pressures could reduce the likelihood of further global interest-rate increases.

Santam (SNT) -2.86%

Santam reported solid FY2025 results, reflecting resilient underwriting performance and continued premium growth. Group insurance revenue increased 7% to R56.1 billion, while conventional insurance net earned premiums rose 15% to R36.9 billion. The conventional insurance underwriting margin improved to 11.3% from 7.6% in 2024, supporting stronger profitability. Headline earnings per share increased 8% to 3,743 cents, with basic EPS up 11%. Alternative risk transfer profit before tax rose to R944 million. The group maintained strong capital strength with an economic capital coverage ratio of 169% and declared a final dividend of 1,090 cents per share, up 11%.

Harmony Gold (HAR) -3.82%

Harmony Gold expects materially stronger interim earnings for the six months ended 31 December 2025, supported primarily by a sharp increase in realised gold prices. Average gold prices rose 36% to R1.91 million/kg (40% to $3,421/oz), driving revenue growth and improved profitability. The group also recognised an impairment reversal at Tshepong North and foreign exchange translation gains. These positives were partially offset by higher production, royalty and finance costs, alongside acquisition-related expenses linked to MAC Copper. EPS is expected to increase 21%–30% to 1,527–1,638 cents, while HEPS is projected to rise 11%–17% to 1,411–1,485 cents.

AVI (AVI) -1.01%

AVI reported solid interim results for the six months ended 31 December 2025, delivering resilient profit growth despite a constrained consumer environment. Revenue increased 4.9%, supported by sales volume growth in biscuits and strong December trading in the fashion retail portfolio, particularly footwear. Gross profit rose 6.3% while operating profit increased 11.6%, reflecting effective margin management and a R39.4 million benefit from restructuring initiatives. Headline earnings per share advanced 11.7% to 455.1 cents. Performance at I&J improved, partly offset by ongoing pressure in the abalone business. The group declared an interim dividend of 245 cents per share, up 11.4%.

Sun International (SUI) -3.64%

Sun International expects strong headline earnings growth for FY2025, reflecting resilient trading across its gaming and hospitality portfolio. Headline earnings per share are projected to increase 35%–40% to between 675 and 698 cents, while adjusted HEPS is expected to rise 4%–8%. Basic EPS is forecast to decline 12%–14%, largely due to fair value adjustments linked to contingent consideration from the Dreams S.A. disposal and a goodwill impairment related to online licences. The group continued to strengthen its balance sheet, reducing debt to R5.0 billion with leverage at 1.5x EBITDA. Full-year results are scheduled for release on 16 March 2026.

Mpact (MPT) +1.86%

Mpact reported mixed FY2025 results amid challenging trading conditions across its core markets. Revenue increased 5% to R14 billion, while underlying EBITDA of R1.5 billion and EBIT of R914 million remained broadly in line with the prior year. Headline earnings per share declined to 307 cents from 324 cents in 2024, reflecting ongoing margin pressures. Net asset value per share increased 6% to R37.76, supported by disciplined capital allocation and operational improvements. The group declared a total dividend of 60 cents per share and indicated that, following the completion of its major investment cycle, focus will shift towards enhancing earnings, cash generation and returns.

Hewlett Packard Enterprise Company (HPE) +3.22%

Hewlett Packard Enterprise forecast second-quarter revenue above market expectations, supported by strong demand for networking equipment and AI-optimised servers. The company expects revenue of $9.6–$10.0 billion, ahead of consensus estimates, while first-quarter revenue rose 18% to $9.30 billion and adjusted EPS of 65 cents exceeded forecasts. HPE also raised its fiscal 2026 adjusted EPS guidance to $2.30–$2.50 and lifted networking segment growth expectations to 68%–73%, reflecting demand following the Juniper Networks acquisition. The company reported an AI backlog exceeding $5 billion, although rising memory costs and limited supply continue to pressure margins across the AI server market.

Universal Health Services Inc. (UHS) -1.10%

Universal Health Services agreed to acquire virtual mental health provider Talkspace for approximately $835 million, reflecting growing demand for behavioural healthcare services. The group will pay $5.25 per share, representing a 10.3% premium to Talkspace’s previous close. Talkspace operates a network of roughly 6,000 licensed professionals and provides services to more than 200 million people through health plans and employer programmes, generating $229 million in revenue in 2025. The acquisition is expected to strengthen Universal Health’s outpatient and digital mental health offering, supporting patient volume growth. The transaction has been approved by both boards and is expected to close in the third quarter.

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