Boeing Soars in May with Record Orders and Ramp-Up in Deliveries

Local Market Commentary

The JSE posted modest gains on Tuesday, with the All Share Index rising 0.25% and the Top 40 climbing 0.32%, ending at 96,657 and 88,974 points respectively, despite fresh data showing a sixth straight monthly decline in South African manufacturing output, which fell 6.3% year on year in April. The contraction highlights ongoing pressure on the industrial sector, which continues to weigh on GDP growth, only 0.1% in Q1, despite resilience in agriculture. Labour tensions flared as Numsa criticised Goodyear’s restructuring plan that will shutter its Nelson Mandela Bay plant, threatening over 900 jobs. Meanwhile, FirstRand secured regulatory approval to acquire HSBC’s South African operations, with deal completion targeted for 31 October 2025 — a move signalling local consolidation amid a challenging macro backdrop.

European Market Commentary

European equities closed broadly flat, with the STOXX 600 remaining unchanged for a second consecutive session as markets took a cautious stance ahead of further developments in U.S.-China trade negotiations. In the UK, the FTSE 100 briefly flirted with record highs before retreating, as soft wage growth and rising unemployment reinforced the case for potential rate cuts by the Bank of England. Economic sentiment across the continent remains mixed, with Spain’s central bank reaffirming near-term growth expectations between 0.5% and 0.6% for Q2, while trimming its full-year forecast to 2.4%. Inflation concerns linger in Eastern Europe, as Ukraine’s CPI surged to 15.9% in May, fuelled by sharp increases in food prices and supply-side constraints following a weaker harvest.

U.S. Market Commentary

U.S. equities advanced on Tuesday, led by gains in Tesla, as investor sentiment improved amid ongoing trade discussions between the U.S. and China. The S&P 500 continued its rebound from April’s tariff-driven downturn and now trades near February’s record highs, as optimism builds around a potential resolution to Washington’s export restrictions and China’s control over rare earth minerals. While U.S. officials indicated talks may conclude by Wednesday, markets remain alert to the outcome and any implications for global supply chains. With risk appetite recovering, investors appear confident that a constructive trade framework could temper geopolitical headwinds and support continued equity market momentum.

Asia Market Commentary

Asian markets advanced on Wednesday, buoyed by reports of an agreement between the U.S. and China aimed at de-escalating trade tensions. The Bank of Japan is now expected to delay further rate hikes until 2026, citing persistent policy uncertainty in global trade. Meanwhile, Japan’s wholesale inflation eased to 3.2% in May, driven by declining raw material import costs, though price pressures in food and beverages accelerated, signalling continued cost-push dynamics. The more moderate reading, down from 4.1% in April, marks the slowest annual pace since September, offering the BoJ some near-term relief but leaving room for policy caution amid patchy domestic demand and external risks.

Currency Market Commentary

The rand strengthened modestly on Tuesday despite discouraging local manufacturing data, buoyed by a pause in dollar strength and renewed optimism over U.S.-China trade talks. The British pound weakened against both the dollar and the euro, pressured by soft wage and employment figures that reinforce expectations of further monetary easing by the Bank of England. Meanwhile, the dollar and yuan held steady as the latest trade discussions concluded in London. While the new framework appears to address export restrictions on rare earths and tech inputs, the absence of a clear enforcement mechanism leaves uncertainty around its durability and implications for broader currency volatility.

Commodity Market Commentary

Gold prices edged higher on Wednesday as market participants sought safe-haven assets amid uncertainty surrounding the U.S.-China trade resolution and ahead of key U.S. inflation data. Oil prices softened during Asian trade due to muted demand from China and a rise in OPEC+ output, further complicating the supply-demand outlook. Although U.S. and Chinese officials reached a tentative framework to remove some export restrictions, investor scepticism remains high due to a lack of substantive long-term resolutions. Meanwhile, Zimbabwe escalated its drive for local beneficiation, announcing a 2027 ban on lithium concentrate exports as it aims to capture more value from its position as Africa’s leading lithium producer.

Premier Group Limited (PMR) +1.92%

Premier delivered a strong set of results for the year ended 31 March 2025, with EBITDA rising 14.7% to R2.4 billion and operating profit up 16.9% to R1.9 billion. This performance was supported by disciplined cost control, improved operational efficiencies, and margin enhancement across both Millbake and Groceries & International divisions. Revenue grew 7.0% to R19.9 billion, despite softness in maize and wheat categories. Manufacturing upgrades and continuous operational improvements—such as the soon-to-launch Aeroton mega-bakery—further supported margin expansion. HEPS increased 26.8% to 943 cents, while strong cash flows enabled further deleveraging, reducing the net debt/EBITDA ratio to 0.7x. A final gross dividend of 271 cents per share was declared, up 23%, while retaining liquidity for strategic agility.

FirstRand Limited (FSR) +1.60%

FirstRand has secured regulatory approval for its acquisition of HSBC South Africa’s clients, banking assets and liabilities, and employees. The transaction is expected to complete by 31 October 2025 and will be led by Rand Merchant Bank (RMB), aligning with its strategy to grow its corporate and multinational client base. HSBC clients will retain digital access via HSBC platforms post-transfer, while RMB will provide local support. FirstRand will allocate capital for the acquired risk-weighted assets, though the CET1 capital ratio impact is not expected to exceed 20 basis points.

Telkom SA SOC Limited (TKG) +7.77%

Telkom reported a solid FY2025, with revenue up 3.3% to R43.88 billion, driven by 10.2% growth in mobile service revenue and a 10.0% rise in fibre-related data revenue. Adjusted EBITDA jumped 25.1% to R11.79 billion, with margins expanding 470bps to 26.9% due to effective cost control. Free cash flow turned positive at R2.78 billion—up R2.35 billion year-on-year—enabling a sharp reduction in gearing, as net debt/EBITDA dropped from 1.8x to 0.6x. Following the R6.62 billion sale of its masts and towers business, Telkom declared an ordinary dividend of 163 cps and a special dividend of 98 cps, underpinning a renewed strategy for sustainable, profitable growth.

KAP Limited (KAP) -22.09%

KAP’s pre-close update for the 11 months to 31 May 2025 flagged continued operational pressure in a weak trading environment. Group performance was impacted by start-up costs on PG Bison’s new MDF line, lower vehicle production at Feltex, and the capitalisation of prior finance costs. While utilisation at the MDF line improved and vehicle production partially recovered, group earnings and operating profit declined due to macroeconomic headwinds, low-margin exports, and restructuring at Unitrans. Divisional results were mixed—Safripol and Sleep Group improved, while Optix and Feltex underperformed. KAP raised R1.6 billion to refinance debt, remaining within covenant levels, though deleveraging has been slower than planned. EPS for FY25 is expected to fall by more than 30%. CEO Frans Olivier has been appointed following Gary Chaplin’s resignation.

Boeing Company (BA) -0.82%

Boeing reported a standout performance in May, securing 303 gross aircraft orders—its sixth-highest monthly total ever—including a record-setting widebody deal with Qatar Airways for 130 787s and 30 777Xs, with options for 50 more. Net new orders stood at 300 after three cancellations. Deliveries also remained strong at 45 aircraft for the month, nearly double the 24 delivered in May 2024. This included 31 737 MAX jets, seven 787s, and a mix of freighters and military aircraft. With 220 aircraft delivered year-to-date, Boeing continues to ramp up 737 MAX production, hitting a key target of 38 units for the month, just ahead of the Paris Air Show where investor focus will remain on order momentum and execution.

General Motors Company (GM) +2.09%

General Motors announced plans to invest approximately $4 billion across three U.S. plants in Michigan, Kansas, and Tennessee to expand production of gas-powered vehicles, signalling a strategic pivot as EV demand moderates. Notably, GM’s Orion plant—previously earmarked for electric trucks—will now produce full-size SUVs and pickups from 2027, casting doubt on GM’s 2035 ICE phase-out goal. The move was welcomed by the White House amid ongoing policy shifts, including a proposed rollback of California’s 2035 zero-emission vehicle mandate. GM will also produce both gas and electric models at its Kansas and Tennessee facilities, while reaffirming no job losses at Mexican plants. With annual capex guidance of $10–$12 billion through 2027, GM is refocusing on core segments, supply chain localisation, and production efficiency.

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