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MARKET COMMENTARY

LOCAL MARKET COMMENTARY

On the Johannesburg Stock Exchange, the Top 40 index and the All Share index both closed about 0.9% lower, ending Monday at 69,920 and 76,188 points, respectively. South Africa's newly elected parliament will convene on Friday, adding urgency for political parties to form a governing alliance after none secured a majority. Alexforbes reported a 16% increase in total closing assets under management and administration to R525 billion for the year ended 31 March 2024. Omnia Holdings declared a special dividend, driven by increased demand for explosives from battery metals exploration.

EUROPEAN MARKET COMMENTARY

European shares fell on Monday, with French stocks suffering particularly after President Emmanuel Macron called a snap election following significant losses for his allies in the EU parliamentary elections. The pan-European STOXX 600 index decreased by 0.4%, with Germany's DAX and Spain's IBEX also down 0.4%. Most sectors within the STOXX 600 traded lower, particularly euro zone banks which fell 1.6%, while the oil and gas sector was an exception, gaining 0.9% due to rising crude oil prices.

US MARKET COMMENTARY

The S&P 500 and Nasdaq reached record closing highs on Monday, despite investor caution ahead of this week's consumer prices report and a Federal Reserve policy announcement. Nvidia's shares rose 0.7% after a 10-for-one stock split, with speculation that the chip maker might join the blue-chip Dow. The Consumer Price Index report for May is due Wednesday, coinciding with the conclusion of the Fed's two-day policy meeting. The central bank is expected to keep interest rates steady while investors seek hints on future rate cuts.

ASIA MARKET COMMENTARY

Asia-Pacific markets showed mixed performance this morning as they resumed trading after a public holiday. The Taiwan Weighted index hit record highs with a 0.46% gain, driven by technology and utility stocks. Japan’s Nikkei 225 rose 0.42%, and the Topix increased by 0.37%. South Korea’s Kospi bounced back from Monday’s losses with a 0.57% rise, and the Kosdaq climbed 0.73%. Conversely, Hong Kong’s Hang Seng index dropped 1.16% at the open, and the mainland Chinese CSI 300 index fell 0.51%.

CURRENCY MARKET COMMENTARY

The South African rand strengthened on Monday as political parties continued negotiations to form a government of national unity following the recent election. The discussions have drawn market attention, contributing to the rand's improved performance. Meanwhile, the dollar hovered near a one-month peak against the euro and reached a one-week high versus the yen on Tuesday as traders anticipated crucial U.S. inflation data and new Federal Reserve interest rate forecasts expected the following day.

COMMODITY MARKET COMMENTARY

Gold edged lower this morning as investors awaited U.S. inflation data and the Federal Reserve's policy announcement later in the week, following a stronger-than-expected payrolls report on Friday. Meanwhile, oil prices continued to rise, building on Monday's rally due to expectations of higher seasonal fuel demand and potential U.S. crude purchases for its petroleum reserve, though a firmer dollar limited the gains.

 

LOCAL COMMENTARY

Oceana Group Limited (OCE) +1.23%

For the six months ending 31 March 2024, the unaudited condensed consolidated interim results showed a significant improvement in financial performance compared to the same period in 2023. Revenue increased by 12.1% to R5.041 billion, operating profit rose by 57.1% to R1.017 billion, and profit before tax surged by 67.6% to R924 million. Earnings per share jumped by 84.4% to 587.6 cents, while headline earnings per share grew by 84.6% to 578.8 cents. Additionally, the Board declared an interim dividend of 195 cents per share, up 50.0% from 130 cents in March 2023.

 

Omnia Holdings Limited (OMN) +8.68%

For the year ending 31 March 2024, audited results show a decline in revenue by 16% to R22.219 billion from R26.572 billion in FY23. Operating profit decreased by 10% to R1.703 billion from R1.899 billion, though the operating margin improved by 7% to 7.7%. Dividends declared increased by 87% to 700 cents per share from 375 cents. The net cash position grew by 27% to R2.301 billion from R1.818 billion. Adjusted headline earnings per share were stable at 737 cents compared to 739 cents, while earnings per share rose by 2% to 705 cents from 692 cents. Net working capital decreased by 15% to R3.604 billion, and net asset value increased by 6% to R10.820 billion. Headline earnings per share fell by 6% to 699 cents from 742 cents. The board declared a final ordinary gross cash dividend of 375 cents and a special gross cash dividend of 325 cents per ordinary share.

INTERNATIONAL COMMENTARY

Southwest Airlines Company (LUV) +7.03%

Activist hedge fund Elliott Management has amassed a $1.9 billion stake in Southwest Airlines and plans to push for leadership changes at the airline that has lagged big rivals. Elliott is seeking to replace Southwest CEO Bob Jordan and Chairman Gary Kelly with outside candidates, the activist said in a letter and presentation Monday. Elliott believes Southwest has fallen from a “best-in-class” airline to one of the biggest laggards, according to the presentation detailing its case for change. The size of Elliott’s stake makes the activist one of Southwest’s largest shareholders, according to FactSet. Elliott said it intends to “pursue all available pathways to deliver the leadership changes” the fund believes Southwest needs.

 

Apple Inc. (AAPL) -1.91%

Elon Musk, the CEO of Tesla and SpaceX, threatened to ban Apple devices from his companies on Monday after the iPhone maker announced a partnership with OpenAI. In a series of posts on his social media platform X, Musk shared concerns about whether Apple and OpenAI will protect users’ information. He called the software integration between the two companies “an unacceptable security violation,” and said Apple has “no clue what’s actually going on.” Apple announced its long-awaited push into artificial intelligence on Monday, which included an update to its voice assistant Siri. As part of the update, Siri can tap into OpenAI’s popular ChatGPT chatbot. Apple said users will be asked for permission to share their questions with ChatGPT, and their requests and information will not be logged.

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About the Author

Research Team
Media, Sasfin Wealth

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