PepsiCo Falls Short on Quarterly Revenue

LOCAL MARKET COMMENTARY

On the Johannesburg Stock Exchange, the blue-chip Top 40 index and the All Share index closed 0.9% and 0.8% higher, ending at 74,122 and 81,094 points, respectively. Statistics South Africa reported that mining production was unchanged, while manufacturing output fell 0.6% year-on-year in May. Additionally, Pick n Pay Stores announced the terms of a R4 billion rights offer, part of a revamp strategy, with 252.2 million shares offered at R15.86 each, 42% below the closing price on July 10.

EUROPEAN MARKET COMMENTARY

European stocks closed higher on Thursday, with the pan-European Stoxx 600 index rising 0.65%. Utilities led the gains, up 1.78%, while media stocks dipped 0.36%. Although tech stocks gained earlier in the day, they ended slightly lower. Flash figures revealed that the U.K. economy grew by 0.4% in May, rebounding from no growth in April and surpassing the 0.2% forecast.

US MARKET COMMENTARY

The Nasdaq ended sharply lower on Thursday, dragged down by losses in Nvidia, Apple, and Tesla as investors shifted focus to smaller companies following softer-than-expected inflation data that increased bets on a Federal Reserve rate cut in September. The S&P 500 also declined after a Labor Department report showed an unexpected drop in U.S. consumer prices in June, with the smallest annual increase in a year, bringing the Fed closer to a potential rate cut. The Dow finished with modest gains.

ASIA MARKET COMMENTARY

Asia-Pacific markets were mixed this morning amid speculation that Japanese authorities intervened in the currency market to support the yen, which surged nearly 3% against the dollar on Thursday. Local media suggested the move was due to official buying from Tokyo to bolster the yen, which has been at 38-year lows, although authorities did not confirm this. Japan’s Nikkei 225 dropped 1.97%, leading losses in Asia after three consecutive days of new closing highs and reaching an all-time high on Thursday.

COMMODITY MARKET COMMENTARY

Gold prices eased this morning but are set for a third consecutive weekly gain after cooler-than-expected U.S. inflation data raised hopes that the Federal Reserve might start cutting interest rates in September. Meanwhile, oil prices edged higher amid signs of easing inflation in the U.S., the world's largest oil consumer, though they are still on track for a weekly decline.

CURRENCY MARKET COMMENTARY

The South African rand extended its gains on Thursday following an unexpected drop in U.S. inflation last month, increasing speculation that the Federal Reserve might cut interest rates in September. The dollar weakened after data revealed a decline in headline consumer prices in June, while a significant surge in the Japanese yen fuelled speculation of possible intervention in the currency market.

British American Tobacco PLC (BTI) -0.18%

British American Tobacco p.l.c. announced that, under the authority granted by shareholders at the Annual General Meeting on 24 April 2024, it purchased 170,000 of its ordinary shares of 25 pence each from UBS AG on 10 July 2024 as part of its buyback program. The highest price paid per share was 2503.00 pence, the lowest was 2478.00 pence, and the volume-weighted average price was 2485.7718 pence. The company plans to cancel these shares. After this transaction, British American Tobacco will have 2,219,822,059 ordinary shares in issue (excluding treasury shares) with voting rights and will hold 133,277,344 ordinary shares in treasury.

Trustco Group Holdings Limited (TTO) -27.08%

Shareholders are referred to the announcement released on SENS on April 23, 2024, where it was advised that Trustco has entered into an agreement with Riskowitz Value Fund LP to acquire 1,135 shares in Legal Shield Holdings Limited by issuing new Trustco shares. Trustco has appointed an independent expert for the Fairness Opinion and a reporting accountant, and has mandated Vunani Capital to act as the transaction sponsor. According to the Update Announcement, a circular with full details of the transaction, including a Fairness Opinion and a notice to convene a general meeting of Shareholders, will be made available soon. With the conclusion of the Transaction, shareholders no longer need to exercise caution when dealing in the Company's securities regarding the Transactions in process.

PepsiCo Inc. (PEP) +0.22%

PepsiCo missed second-quarter revenue expectations on Thursday due to a series of price hikes and increased competition from private-label brands, which slowed sales of its snacks and soda in the United States. Despite raising average product prices by 5% for the quarter, overall organic volumes fell by 3%. Company executives noted that consumers have become more value-conscious, affecting performance across many food categories. PepsiCo's shares dropped 3.4% to a nine-month low of $158.03. The company now expects fiscal 2024 organic revenue to grow by about 4%, down from prior expectations of at least 4%. However, reduced production and other expenses, combined with price hikes, allowed PepsiCo to report an adjusted profit of $2.28 per share, beating estimates of $2.16. Revenue for the quarter rose 0.8% to $22.50 billion, slightly below the estimated $22.57 billion.

Delta Air Lines Inc. (DAL) -3.99%

Delta Air Lines announced on Thursday that it expects its pricing power to "significantly" improve starting in August as U.S. carriers reduce seat capacity growth to alleviate discounting pressures. Despite this, the airline forecast a lower-than-expected profit for the third quarter, attributing it to excess industry capacity lowering airfares in the budget market. This news helped Delta's stock recover some losses, closing down 5.4% at $44.30 after an earlier drop of 10%. Delta projected an adjusted profit of $1.70 to $2.00 per share for the third quarter, below analysts' expectations of $2.05. The airline reported a second-quarter adjusted profit of $2.36 per share, matching analysts' estimates, and reaffirmed its 2024 profit forecast of $6 to $7 per share with a free cash flow of $3 billion to $4 billion.

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