BMW shares rise as firm reaffirms profit outlook despite China slowdown and tariff headwinds

Local Market Commentary

Recent data showed a modest rebound in manufacturing, with output rising 0.5% year on year and 2.0% month on month in May after a sharp drop in April. Meanwhile, the JSE Top 40 index closed flat yesterday at 89,540.6 points, while the broader JSE All Share index ended at 97,364.5 points, 0.14% lower on the day. These movements reflect investor caution ahead of key policy signals. The President has launched a National Dialogue through the Eminent Persons Group, aiming to tackle governance and economic reform challenges.

European Market Commentary

The EU released its voluntary Code of Practice for AI, aiming to guide companies on ethical use and compliance. At the same time, an analysis revealed that while several large rail megaprojects have secured a significant share of EU funding, many smaller but important rail upgrades have received less, highlighting a need for more balanced infrastructure investment. These developments reflect Europe’s focus on managing new technology responsibly while strengthening strategic infrastructure, both of which could shape investment flows in sectors tied to innovation and defence.

US Market Commentary

President Trump announced a new wave of tariffs, including a steep levy on Canadian imports and higher duties on goods from other trading partners, as well as a heavy tariff on copper. These moves raise the cost of inputs for US manufacturers and could slow global trade. Despite these headwinds, US stock markets kept reaching record highs, supported by solid earnings growth and optimistic outlooks from banks and tech companies. The Federal Reserve’s latest minutes showed a cautious “wait-and-see” approach ahead of key economic data, suggesting investors must balance rising trade tensions with ongoing corporate resilience.

Asia Market Commentary

Asian markets opened lower in response to US tariff threats, although China’s markets showed some resilience amid hopes for trade easing. In response to tensions, China took retaliatory steps by excluding European firms from public-sector medical procurement and imposing anti-dumping duties on certain imports, escalating trade friction with Europe. Investors should keep a close eye on diplomatic developments and market movements as export-heavy companies in the region face growing uncertainty.

Currency Market Commentary

The US dollar strengthened slightly as markets digested the latest tariff announcements and sought safety amid rising global trade tensions. The dollar’s modest gains were supported by its traditional role as a safe haven during periods of uncertainty, attracting investors seeking stability. In contrast, the Canadian dollar weakened noticeably, feeling the direct impact of tariffs announced against Canadian imports. The euro and British pound also slipped amid growing fears that escalating trade conflicts could slow economic growth in Europe. However, commodity-linked currencies like the Australian and New Zealand dollars bucked the trend, gaining ground thanks to their economies’ exposure to natural resources.

Commodity Market Commentary

Oil prices rebounded modestly after a period of decline, as traders balanced concerns over OPEC+ production decisions with the impact of new US tariffs on global trade. While supply constraints remain a key driver supporting prices, the looming threat of slower economic growth due to trade tensions is causing some caution among market participants. Meanwhile, copper continues its strong upward trajectory this year, with prices surging around 40% year-to-date. This rally is fueled by a mix of supply concerns, rising demand from the green energy sector, and recently announced US tariffs that could increase input costs for manufacturers worldwide.

Telkom SA SOC Limited (TKG) +6.71%

Yesterday, Telkom announced that the Public Investment Corporation (PIC) increased its beneficial ownership to just over 10.25% of the company’s ordinary shares, as formally reported under South Africa’s Companies Act and Takeover Regulation Panel rules. While the announcement did not include any financial or dividend information, such a significant institutional holding signals PIC’s growing confidence or strategic repositioning within Telkom. Investment professionals should watch for any related market activity or analyst insights, as changes at this level often precede shifts in shareholder dynamics or corporate strategy, even if no immediate operational news is provided.

Delta Air Lines Inc. (DAL) +11.99%

Delta delivered strong second-quarter results on 10 July, comfortably beating expectations. Adjusted earnings came in at $2.10 per share with revenue of $15.5 billion. The airline also reported solid profits and a healthy 13.2% operating margin. Off the back of this performance, Delta reinstated its full-year guidance and announced a 25% dividend increase starting in the third quarter. International travel was a key highlight, with strong growth on Pacific and Atlantic routes. Management remains focused on keeping costs in check, especially non-fuel expenses, which are expected to stay flat or fall slightly in the coming quarter.

BMW AG (BMW) +4.15%

BMW shares climbed on 10 July after the automaker struck an optimistic tone in a pre-earnings update. Despite dealing with rising tariffs and weaker demand from China, the company reaffirmed its full-year profit margin outlook of 5–7%. Demand in Europe held up well, offsetting slower growth in Asia, while the U.S. market remained stable. Analysts welcomed the update and said BMW seems well-positioned to handle the current challenges. The company also confirmed two upcoming investor events and reminded markets that full Q2 results will be released on 31 July.

Conagra Brands Inc. (CAG) -4.37%

Conagra’s fiscal fourth-quarter earnings came in just shy of forecasts, with EPS of $0.56 and revenue a touch below target. More concerning for investors was the company’s lowered guidance for the new fiscal year—now well below what the market had been expecting. Conagra pointed to a mix of rising input costs, inflation, and supply chain issues, with new U.S. tariffs adding pressure on margins. They estimate tariffs alone could lift production costs by around 3% annually. Management is working on cost-saving initiatives and looking for alternative sourcing to cushion the blow.

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