Goldman Sachs Q1 Earnings Beat Estimates with 15% Profit Surge, Strong Equities Trading Drive Growth

Local Market Commentary

South African equities rallied on Monday, with the Top 40 index rising by 2.65% to close at 81,549.7 points, and the All Share index increasing by 2.67% to end at 988,717.1 points, driven by broad market strength. However, investor attention remains on emerging risks, including potential strike action at Transnet after wage talks with Untu reached a deadlock—posing a threat to mineral and agricultural exports. In the energy sector, Eskom has initiated a tender process to establish an independent renewable energy unit, aiming to accelerate its clean energy transition. Meanwhile, fiscal tensions persist as the Road Accident Fund challenges the SA Revenue Service in court over the withdrawal of nearly R1bn from levy funds, part of a broader R5.1bn dispute linked to Eskom’s diesel refund claims.

European Market Commentary

European equities rebounded sharply on Monday, with the STOXX 600 closing 2.7% higher as over 96% of constituents advanced, driven by improved risk sentiment following U.S. President Trump's decision to exclude smartphones and computers from China tariffs. The relief rally followed weeks of trade-related volatility, which continues to weigh on global growth prospects. In Germany, the incoming coalition government led by Friedrich Merz is proposing tax cuts and a minimum wage increase to stimulate domestic consumption, though analysts remain sceptical about Germans shifting from saving to spending. In the UK, retail data showed modest growth, with British Retail Consortium members reporting a 1.1% year-on-year rise in March sales, while Barclays noted a 0.5% increase, both dampened by inflation and calendar effects. Warmer weather supported niche sectors like garden centres and specialty food retailers, though supermarkets saw a notable 2.6% decline in sales.

U.S. Market Commentary

U.S. equities closed higher on Monday, buoyed by Apple’s gains after the White House exempted smartphones and computers from the latest round of tariffs, providing temporary relief to markets. However, ongoing uncertainty around future trade policy capped gains, with major indexes retreating from intraday highs amid continued volatility. Investor sentiment remains fragile, as tariff-related disruptions pose risks to supply chains and broader economic stability. With first-quarter earnings season underway, companies are expected to remain cautious in their guidance. Reflecting these concerns, Citigroup downgraded its outlook on U.S. equities and lowered its S&P 500 target below 6000, joining other major brokerages such as Goldman Sachs and Bank of America in anticipating weaker earnings due to tariff headwinds.

Asia Market Commentary

Asia-Pacific markets edged higher this morning, tracking gains on Wall Street where a tech-led rally lifted all three major indices. Investor focus now shifts to India’s March inflation data, with CPI expected at 3.60% and WPI at 2.5%, according to Reuters polls—broadly unchanged from February. In Japan, Prime Minister Shigeru Ishiba stated the government will not rush tariff negotiations with the U.S., despite ongoing 24% levies that remain temporarily paused. Meanwhile, TSMC is set to report a 54% year-on-year surge in Q1 profit on Thursday, driven by strong AI chip demand, though the company is expected to highlight potential headwinds from evolving U.S. trade policies.

Currency Market Commentary

The South African rand strengthened on Monday, supported by a report suggesting the ruling party may reconsider plans to raise VAT, alongside broader dollar weakness in global markets. Although the dollar remained steady on Tuesday, it hovered near multi-month lows against major currencies, as investors continued to grapple with policy uncertainty stemming from shifting U.S. tariff positions. Despite rising U.S. Treasury yields, subdued confidence in the dollar and U.S. assets has kept currency markets cautious, though trading was notably calmer in early Asian sessions following last week’s volatility.

Commodity Market Commentary

Oil prices rose in early trading on Tuesday, supported by proposed U.S. tariff exemptions and a rebound in Chinese crude imports, as refiners anticipate tighter Iranian supply. March customs data showed an increase in China's crude imports year-on-year, though imports of other key commodities such as soybeans, coal, iron ore, and copper declined. Meanwhile, exports surged as Chinese factories accelerated shipments ahead of new U.S. tariffs, though the escalating trade conflict continues to weigh on broader economic sentiment. Gold edged higher amid persistent uncertainty surrounding U.S. trade policy and its potential global economic ramifications.

Gold Fields Limited (GFI) -5.62%

Gold Fields has announced that its application for an extension of the Damang Main Mining Lease, submitted in December 2024, was rejected by the Minerals Commission of Ghana. Despite extensive engagement with authorities, the company has been instructed to cease operations and vacate the lease area by 18 April 2025. Gold Fields is now preparing to responsibly halt operations, ensuring the safety of its personnel. While this impacts Damang, operations at Tarkwa remain unaffected. The company is continuing discussions with the government to secure a positive resolution and will provide further updates as necessary.

Remgro Limited (REM) +4.10%

Remgro has released a voluntary trading update for Manta Bidco, which it jointly owns with MSC Group. For the year ended 31 March 2025, Manta Bidco expects a 5% increase in USD revenue (4% in constant currency), alongside an adjusted EBITDA margin of 15.0%, up from 14.7% in FY24. Performance varies by region: Hirslanden in Switzerland anticipates 2% revenue growth with stable margins; Mediclinic Southern Africa expects a 7.5% revenue increase and steady margins at 18.2%; and Mediclinic Middle East forecasts 5% revenue growth with a 15% margin. The Group continues to focus on operational efficiencies amid a challenging environment, although market and regulatory changes in Switzerland could lead to a potential non-cash impairment charge. These estimates have not been reviewed by external auditors.

Schroder European Real Estate Investment Trust (SCD) -2.25%

Schroder European Real Estate Investment Trust has provided an update on its property portfolio valuation as at 31 March 2025. The direct investment portfolio was valued at €194.0 million, reflecting a minor like-for-like decrease of 0.3% (€0.6 million) for the quarter, with robust industrial asset performance offsetting declines in other sectors. The industrial portfolio saw a 1.8% increase (€1.3 million), while office assets declined by 0.9%, with Hamburg's value dropping 4%. The value of the retail portfolio, following the €11.80 million sale of a grocery asset in Frankfurt, fell by 2% due to a decrease in the Berlin DIY store’s value. The alternative portfolio saw a 2.7% decline, driven by a reduction in the Apeldoorn data centre valuation. The company will change valuers from Knight Frank to Savills as of 30 June 2025, with a shadow valuation confirming consistency with Knight Frank's assessment.

Goldman Sachs Group Inc. (GS) +1.93%

Goldman Sachs reported stronger-than-expected first-quarter earnings, with net profit rising 15% year-on-year to $4.74 billion ($14.12 per share), comfortably surpassing analyst expectations of $12.35 per share. The standout performance was driven by a 27% surge in equities trading revenue to a record $4.2 billion, buoyed by heightened market volatility, while fixed income, currency, and commodities revenue rose modestly to $4.4 billion. Despite these gains, investment banking fees declined 8% and asset and wealth management revenue dipped 3%, reflecting market-driven investment losses. Assets under supervision reached an all-time high of $3.17 trillion as the bank seeks greater stability in revenue generation. Management continuity was reinforced with $80 million stock awards each to CEO David Solomon and President John Waldron, while staff numbers saw only a marginal increase. The bank flagged a $150 million severance charge for Q2 amid ongoing efficiency measures and reported $287 million in credit loss provisions, primarily tied to its credit card exposure.

Applied Digital Corporation (APLD) +1.51%

Applied Digital reported third-quarter revenue of $52.9 million, falling short of Wall Street expectations amid delays in data centre lease renewals, which led to an 11% drop in its share price during extended trading. The company announced plans to explore a sale of its cloud services segment as it pivots toward becoming a data centre-focused real estate investment trust. Hosting revenue, largely tied to cryptocurrency mining clients, declined 7% to $35.2 million, impacted by seasonal power cost fluctuations that pressured margins. The cloud services division contributed $17.8 million in revenue, with efforts underway to lease out its Ellendale campus to improve utilisation. Despite the revenue miss, the company reported a smaller-than-expected adjusted loss of 8 cents per share versus the forecast 11-cent loss.

LVMH Moet Hennessy Louis Vuitton SE (LVMH) +1.09%

LVMH reported a 3% year-on-year decline in first-quarter 2025 revenue, missing analyst expectations for 2% growth, as US consumers cut back on beauty and alcohol spending and Chinese demand remained subdued. The Group generated €20.3 billion in sales for the period ending 31 March 2025. The fashion and leather goods division, responsible for nearly half of revenue and over 75% of profit, saw a 5% drop in sales—well below forecasts for flat performance. US sales declined 3%, while Asia (excluding Japan) recorded an 11% drop. Analysts flagged the results as a warning sign for luxury brands heading into a potentially challenging year, particularly amid tariff risks following recent US policy shifts under President Trump. Although a 90-day pause and a moderated 10% duty have been introduced, full implementation could mean 20% tariffs on European luxury goods and 31% on Swiss watches, pressuring sector margins despite its pricing power.

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