JPMorgan Chase Shares Surge 5% on Strong Earnings

LOCAL MARKET COMMENTARY

The blue-chip Top 40 index and the broader All Share index rose by about 0.83% and 0.89% on Friday, ending at 78,007 and 86,149 points, respectively, while South Africa’s tax service announced that R21.4 billion ($1.2 billion) has been paid out in the six weeks since a reform allowed partial pension fund withdrawals before retirement. Meanwhile, the Social Security Agency (Sassa) has recovered nearly R150 million in Social Relief of Distress (SRD) grants paid to ineligible recipients, but the Auditor-General reported ongoing non-compliance, with some grants still reaching ineligible beneficiaries.

EUROPEAN MARKET COMMENTARY

European markets closed higher on Friday as investors analysed U.K. GDP growth data showing a 0.2% increase in August after stagnant growth in June and July, meeting expectations. Investors also considered France's draft budget, which includes €60 billion ($65.6 billion) in tax hikes and spending cuts aimed at reducing its deficit—measures that analysts warn could slow economic growth and risk further credit rating downgrades. Meanwhile, markets anticipate an October 17 European Central Bank meeting, with a rate cut almost fully priced in, and another possible in December.

 US MARKET COMMENTARY

On Friday, the S&P 500 and Dow reached record highs, driven by strong performance from financial stocks after major banks like JPMorgan Chase reported better-than-expected quarterly profits, pushing its stock up 4.4%. This positive earnings news, along with inflation data suggesting stable producer prices in September, has increased expectations for a possible Federal Reserve rate cut in November. However, consumer sentiment in early October came in lower than forecasted, and jobless claims were higher than anticipated, hinting at mixed economic signals.

ASIA MARKET COMMENTARY

Asia-Pacific markets showed mixed performance this morning as investors reacted to China’s weekend press briefing and awaited upcoming regional economic data. China’s Finance Minister Lan Fo’an hinted at potential increased debt issuance to support the economy, noting the government’s significant room to expand the deficit. In September, China’s consumer prices rose at a slow pace of 0.4% year-over-year, while the producer price index dropped by 2.8%, both missing expectations. Japan’s market remained closed due to a holiday.

CURRENCY MARKET COMMENTARY

South Africa's rand strengthened against the dollar on Friday, supported by U.S. data reinforcing expectations of a Federal Reserve rate cut next month. However, the dollar gained ground in trading today in Asia, as reduced liquidity due to a holiday in Japan shifted market attention to China’s lacklustre weekend stimulus announcements.

COMMODITY MARKET COMMENTARY

Gold prices climbed over 1% on Friday, as U.S. inflation data boosted expectations for a potential rate cut next month, weakening the dollar. Geopolitical tensions in the Middle East also increased safe-haven demand for gold. Meanwhile, oil prices dropped more than $1 per barrel, losing over 1.5% this morning, due to disappointing Chinese inflation data and uncertainty over Beijing’s economic stimulus plans, which raised concerns about future demand.

Bell Equipment Limited (BEL) -4.55%

The Company has informed shareholders that its earnings per share (EPS) and headline earnings per share (HEPS) for the year ending December 31, 2024, are expected to drop by at least 25% (or 200 cents) compared to last year’s EPS and HEPS of 799 cents and 798 cents, respectively. This decline is mainly due to weakened market conditions that have impacted production and sales, particularly in the second half of the year. A more detailed update will be provided once the Company has clearer information on the extent of this earnings decrease.

Zeder Investments Limited (ZED) -3.00%

For the six months ending August 31, 2024, Zeder reported a 17.9% decrease in net asset value per share (NAVPS) to R2.15, down from R2.62 the previous year, largely due to special dividend payments and adjustments in unlisted investment valuations. Additionally, headline and attributable earnings per share shifted from a 3.6 cents gain to a 4.1 cents loss, and profit before tax dropped from a R51 million profit to a R77 million loss. No ordinary dividends were declared during this period.

JPMorgan Chase & Company (JPM) +4.44%

JPMorgan Chase reported third-quarter earnings that surpassed expectations, with earnings per share at $4.37 versus the estimated $4.01 and revenue at $43.32 billion compared to the forecasted $41.63 billion. Although profit dropped 2% year-over-year to $12.9 billion, revenue increased by 6%, driven by a 3% rise in net interest income, which reached $23.5 billion, surpassing estimates. The bank also raised its full-year 2024 net interest income forecast to $92.5 billion and lowered expected expenses to $91.5 billion. JPMorgan's shares rose 5% in midday trading and have gained around 25% this year.

Wells Fargo & Company (WFC) +5.61%

Wells Fargo’s third-quarter profit exceeded analysts' expectations, as it set aside less money for potential loan losses and projected stable interest income, which boosted shares by 6%. The bank reported earnings per share of $1.52, higher than the expected $1.28, despite an 11% drop in net interest income (NII) to $11.69 billion, slightly below predictions. Revenue fell 2% to $20.37 billion. Looking ahead, Wells Fargo forecasted a 9% decline in NII for 2024, which is more conservative than the anticipated 8.4% drop, due to recent Federal Reserve interest rate cuts.

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