In today's Taking Stock, Adobe lifted its full-year guidance on the back of sustained momentum in demand for its AI-driven creative tools, particularly in image and video generation.
Local Market Commentary
The JSE Top 40 index gained 0.83% to close at 89,326.2 points, while the All Share index rose 0.65% to 97,029.3 points. Transnet, South Africa’s state-owned ports and freight rail operator, announced a wage agreement with its recognised unions, averting a potential strike. The deal includes an 18% salary increase over three years. This marks a resolution with UNTU, the majority union, which had previously demanded a 10% increase over one year, whereas SATAWU had already accepted a 17.5% three-year deal. The last major Transnet strike in 2022 disrupted key exports. Government efforts to reform Transnet continue amid its struggle with infrastructure shortfalls that have hindered economic growth—similar to challenges faced by Eskom.
European Market Commentary
European stocks fell for a fourth consecutive session on Thursday, with the STOXX 600 index closing 0.3% lower—the longest losing streak in over two months—as trade-related uncertainty and geopolitical tensions weighed on sentiment. U.S. President Donald Trump signalled ambiguity on trade deadlines, dampening optimism. In the UK, hiring slowed again in May, with permanent placements down and only a marginal decline in temporary staffing. GDP data revealed a sharp 0.3% contraction in April, the worst monthly drop since October 2023, largely driven by a fall in services output, particularly in real estate following the expiry of a temporary property tax break. Automotive output and exports to both the U.S. and EU also declined.
U.S. Market Commentary
The S&P 500 closed higher on Thursday, buoyed by a 13.3% surge in Oracle shares after the company raised its AI-driven revenue outlook. This offset concerns over Middle East tensions and a decline in Boeing’s stock. Economic data showed softer-than-expected U.S. producer price inflation and a modest rise in jobless claims, reinforcing expectations for potential Federal Reserve rate cuts from September. Producer prices rose 2.6% year-on-year in May, with core inflation likely in line with the Fed’s 2% target. Jobless claims held steady at 248,000, but continuing claims rose to their highest level since November 2021, suggesting a cooling labour market.
Asia Market Commentary
Asian markets declined on Friday following reports of Israeli airstrikes on Iran targeting nuclear sites, escalating regional tensions. In South Korea, central bank Governor Rhee Chang-yong warned that aggressive interest rate cuts could overheat the property market and destabilise currency movements, even as economic momentum remains weak. In India, May retail inflation eased to 2.82%, its lowest level in over six years and well below the central bank’s 4% target for the fourth straight month, supporting the Reserve Bank of India’s recent rate cut.
Currency Market Commentary
The South African rand weakened after disappointing mining production data. Sterling rose against the U.S. dollar but fell to a six-week low versus the euro following subdued economic data from both sides of the Atlantic. The euro strengthened to a nearly four-year high against the dollar as investors shifted to safer assets. The dollar index has declined nearly 10% year-to-date, with global markets adjusting to volatile U.S. trade policy and increasing speculation over Fed rate cuts—driving capital away from the U.S. and impacting inflation and growth abroad.
Commodity Market Commentary
Gold prices reached a one-week high, supported by Middle East conflict concerns and softer U.S. economic data, which increased expectations for Fed rate cuts. Oil surged more than 7% on Friday after Israel confirmed strikes on Iran, fuelling fears of supply disruptions. Explosions were reportedly heard in Tehran, intensifying geopolitical risk and prompting a sharp spike in crude prices.
Quantum Foods Holdings Limited (QFH) 0.00%
Quantum Foods has announced that Capitalworks Private Equity SP GP II, along with related entity Crown Chickens (a subsidiary of Sovereign Food Investments), has expanded its beneficial interest in the company to 15.53% through a series of unconditional sale agreements. Additionally, via a right of first refusal (ROFR) arrangement with Aristotle Africa S.à r.l., the Capitalworks Entities now have the potential to control over 50% of Quantum’s shares. Despite this strategic position, Capitalworks has confirmed it does not currently intend to make a general offer to shareholders and is not acting in concert with Aristotle or any third party.
Southern Palladium Limited (SDL) +33.33%
Southern Palladium has raised A$8 million through a fully subscribed placement of 16 million new shares at A$0.50 each—matching the last close and priced at a 10.5% premium to the 10-day VWAP—to accelerate DFS activities and initial mine development at its Bengwenyama PGM project. A key A$4.6 million cornerstone investment by a major shareholder, alongside support from other institutional investors, underlines confidence in the project. The funding will enable the release of an optimised PFS, progress on the Mining Right application, and early-stage site work, with the capital raise structured to minimise dilution and maintain a disciplined financial strategy.
Adobe Inc. (ADBE) +0.20%
Adobe lifted its full-year guidance on the back of sustained momentum in demand for its AI-driven creative tools, particularly in image and video generation. The firm, anchored by core products like Photoshop and Premiere Pro, saw signs of recovery in the second quarter following a cautious first quarter impacted by macro-related budget pressures. Analysts at Jefferies noted an encouraging rebound in client activity, supporting Adobe’s revised FY25 revenue range of $23.50–$23.60 billion, up from $23.30–$23.55 billion. Adjusted EPS guidance was also raised to $20.50–$20.70. The company is advancing its generative AI offering by integrating models from OpenAI and Google into its Firefly platform. Q2 revenue came in at $5.87 billion, surpassing consensus expectations of $5.79 billion, while the Q3 outlook similarly exceeded market forecasts.
Pirelli & C. S.pA. (PIRC) -0.42%
Pirelli shareholders approved the 2024 annual report and a €250 million dividend payout, despite opposition from its largest investor, Sinochem, which holds a 37% stake. The vote outcome highlights Sinochem’s diminished influence following intervention by the Italian government to limit foreign control in strategic assets. The ongoing tension between Sinochem and Camfin—Pirelli’s second-largest shareholder and the investment vehicle of long-time executive Marco Tronchetti Provera—reflects broader concerns that Chinese ownership may hinder Pirelli’s expansion plans in the United States. Camfin currently holds a 27.4% stake in the company.In a challenging context for the whole automotive industry, Pirelli last year posted above-target results, with a 2% revenue increase and a margin on adjusted operating profit rising to 15.7%.
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