LOCAL MARKET COMMENTARY

On the Johannesburg Stock Exchange (JSE), there was minimal movement, with both the broader All-Share index and the blue-chip Top-40 index finishing close to their previous closing levels at 74,086 and 68,540 points, respectively. In corporate developments, Discovery, a major health insurance and expanding banking group, anticipates a substantial profit increase of up to 35% for the fiscal year ending in June 2023, leading to a nearly 3% rise in its share price on Tuesday. On a different note, Libstar, a manufacturer of branded and private label consumer packaged goods listed on the JSE, has revealed plans for a portfolio restructuring aimed at driving profit growth and enhancing returns for stakeholders. 

EUROPEAN MARKET COMMENTARY

European stock markets closed with slight losses on Tuesday, erasing earlier gains, as investors closely monitored a week filled with economic data releases. Notably, the UK witnessed a 13% increase in late mortgage payments during the second quarter, with a significant 28.8% annual surge, as reported by the Bank of England. The total late payments reached £16.9 billion ($21.08 billion) for the three months ending in June, marking the highest level since 2016. Looking ahead, the European Central Bank is set to announce its next rate decision on Thursday. While the market currently assigns a roughly 40% probability of a 25-basis point hike to 4.00%, economists anticipate a closely contested decision, according to Reuters.

US MARKET COMMENTARY

The Nasdaq Composite experienced a decline on Tuesday, with Oracle shares suffering their worst day since 2002. Oracle, a software company, was the poorest performer in the S&P 500, plummeting by 13.5% following disappointing sales in the last quarter, as well as a revenue forecast that failed to meet expectations. These results were from Oracle's fiscal first-quarter report released late on Monday. Investors are now closely watching upcoming key inflation data, with the consumer price index expected to be released on Wednesday and the producer price index scheduled for Thursday.

ASIA MARKET COMMENTARY

Asia-Pacific markets experienced widespread declines as investors analysed significant economic data releases from Japan and South Korea. South Korea reported a notable drop in its unemployment rate for August, which stood at 2%, the lowest it has been since June 1999. On the other hand, Japan saw a decrease in corporate confidence in September, affecting both manufacturers and non-manufacturers, according to the Reuters Tankan poll. Large manufacturers' confidence declined to +4, down from +12 in August, while the non-manufacturers index fell by nine points to reach +23 in September. These contrasting economic indicators contributed to the overall market downturn in the region.

COMMODITY MARKET COMMENTARY

Gold prices experienced a slight decline this morning but remained above the more than two-week low recorded in the previous session. Investors are closely monitoring upcoming U.S. inflation data, as it could influence expectations regarding the Federal Reserve's stance on interest rates. In the oil market, prices edged higher, maintaining a new 10-month high reached the previous day. This increase is driven by expectations of a tightening global supply and concerns about potential supply disruptions in Libya, which have outweighed worries about reduced demand in certain countries, including China.

CURRENCY MARKET COMMENTARY

The South African rand faced a depreciation against the US dollar on Tuesday, with market attention focused on the upcoming U.S. inflation data scheduled for Wednesday. This data release is expected to provide insights into the Federal Reserve's future interest rate decisions. Meanwhile, the US dollar remained relatively stable in the morning session, anticipating a crucial U.S. inflation report later in the day. The dollar did strengthen against the yen, driven by evaluations of comments made by Japan's top central banker regarding a potential early exit from the country's negative interest rate policy.

DISCOVERY (DSY) +2.7%

Shareholders and noteholders should be aware that the company's projected financial performance for the reporting year includes the following estimates: Earnings per share (EPS) on a basic level are anticipated to decrease by 3% to 8%, falling within a range of 759.5 cents to 800.7 cents, as compared to the prior period's reported EPS of 825.5 cents. Conversely, Headline earnings per share (HEPS) on a basic level are expected to increase by 3% to 8%, ranging from 816.2 cents to 855.8 cents, in contrast to the reported HEPS of 792.4 cents for the prior period. Moreover, Normalised HEPS (NHEPS) on a basic level are projected to rise significantly by 30% to 35%, reaching a range of 1,151.2 cents to 1,195.4 cents, as compared to the prior period's reported NHEPS of 885.5 cents.

WILSON BAYLY HOLMES – OVCON (WBO) +0.5%

In the context of continuing operations, the company experienced significant growth, with a 38% increase in revenue to R24 billion compared to R17 billion in 2022. Earnings per share (EPS) also saw a substantial rise, increasing by 29% to 1,679 cents per share, compared to 1,303 cents in the previous year. Similarly, headline earnings per share (HEPS) increased by 31% to 1,703 cents per share, up from 1,297 cents in 2022. However, the company declared no final dividend, resulting in a total dividend for the year of nil cents per share, consistent with the previous year. The net asset value stood at R3.9 billion, compared to R2.9 billion in 2022. In terms of discontinued operations, there was a loss of R101 million, a significant improvement from the R1.9 billion loss in 2022. Loss per share decreased by 96% to 189 cents per share, compared to 5,365 cents in the previous year. Similarly, headline loss per share also decreased by 96% to 189 cents per share, compared to 4,990 cents in 2022. When considering both continuing and discontinued operations, the company reported a remarkable turnaround, with earnings per share (EPS) increasing by 137% to 1,490 cents per share, compared to a loss per share of 4,062 cents in 2022. Headline earnings per share (HEPS) also saw a significant improvement, increasing by 141% to 1,514 cents per share, compared to a loss per share of 3,693 cents in the previous year.

Apple (AAPL) -1.7%

Apple introduced its latest iPhone series, the iPhone 15, featuring a new titanium shell, enhanced processing power, and improved gaming capabilities. What caught the attention was that Apple decided not to increase the prices, a departure from the industry trend, possibly due to the ongoing global slowdown in smartphone sales. The unveiling event took place at Apple's headquarters in Cupertino, California, against a backdrop of economic uncertainty, notably in China, which is Apple's third-largest market. In China, Apple faces challenges such as stricter regulations regarding iPhone use in government offices and competition from Huawei Technologies, which recently launched its first flagship phone in several years. The iPhone 15 is set to hit the market on September 22.

TSMC (2330) +1.5%

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, is shifting its focus towards Japan as a production base due to ongoing challenges at its new factory in Arizona. TSMC has encountered difficulties in Arizona, including a shortage of skilled workers for chip manufacturing and resistance from local unions regarding efforts to import labor from Taiwan. In contrast, TSMC is gaining confidence in Japan, where it is investing $8.6 billion in a fab facility located on the island of Kyushu. This facility is expected to commence the production of mature-technology chips in 2024, making Japan an increasingly attractive option for TSMC's expansion plans.

Wells Fargo (WFC) +2.9%

Wells Fargo is planning to further reduce its headcount as part of its efforts to enhance efficiency, according to Chief Financial Officer Mike Santomassimo. The bank has been steadily reducing its workforce since the third quarter of 2020 and has already cut nearly 40,000 employees. Santomassimo indicated that these workforce reductions are likely to continue, stating, "I do think that there's more to do, and you'll see that through the headcount number." At the end of the June quarter, Wells Fargo had 233,834 employees, down from 243,674 in the second quarter of the previous year.

Do you prefer a full in-depth report you can read offline? Click here to download the full report.