Wells Fargo Q4 profit misses on severance costs despite NII growth and post cap expansion plans

South African Market Summary

South African equities were marginally weaker, with the All Share Index slipping 0.09% to 120,856.82 points and the Top 40 edging 0.01% lower to 113,121.36 points. Resources outperformed, rising 0.80%, while Financials and Industrials declined 0.36% and 0.66% respectively. Sasol led gains, advancing 5.63%. Mr Price fell to a new 52-week low amid ongoing uncertainty over its proposed R9.7 billion acquisition of NKD. Regulatory risk also rose after a court ordered Nersa to reassess 2024/25 municipal electricity tariffs.

 European Market Summary

European equities closed at a record high, with the STOXX 600 advancing 0.18% to 611.56 points, supported by strength in chemicals and healthcare. The chemicals sector rose 2%, led by an 8% gain in EMS Chemie following a broker upgrade, while healthcare climbed 1.3% as AstraZeneca advanced on an AI acquisition and Orion surged on a stronger 2026 outlook. Investor sentiment remained constructive despite ongoing geopolitical risks, aided by improving UK housing expectations and signs of easing financing conditions. Switzerland’s move towards a formal US trade agreement also provided modest regional support.

American Market Summary

US equities closed lower, led by weakness in technology and financials as investors rotated towards more defensive sectors. The Dow Jones Industrial Average slipped 0.09% to 49,149.63, the S&P 500 declined 0.53% to 6,926.60, and the Nasdaq Composite fell 1.00% to 23,471.75. Bank shares extended recent losses amid mixed earnings and renewed concern over proposed caps on credit-card interest rates. In contrast, consumer staples outperformed, while the Russell 2000 and S&P 500 industrials reached record highs. Markets continue to price in steady Fed policy near term, with rate cuts expected later in the year.

Asian Market Summary

Asia-Pacific markets traded mixed as investors assessed regional policy and inflation signals. The Bank of Korea held its benchmark rate at 2.50%, reflecting limited scope for easing amid recent currency weakness. In Japan, wholesale inflation slowed on lower fuel costs, although stabilising import prices suggest yen depreciation could keep inflation pressures elevated and raise the prospect of a near-term rate hike. In equities, focus turned to Taiwan Semiconductor Manufacturing, which is expected to deliver a sharp rise in fourth-quarter profits, underpinned by sustained demand for artificial intelligence infrastructure.

Currency Market Summary

The South African rand firmed in early trade, supported by record gold prices, as global investors assessed key US inflation data for signals on the Federal Reserve’s policy outlook. The Japanese yen held recent gains but remained near 18-month lows, with intervention risks lingering amid political uncertainty and the prospect of further fiscal stimulus. The US dollar initially weakened after Federal Reserve Chair Jerome Powell criticised political pressure on the central bank, but later stabilised as markets absorbed the developments, despite ongoing concern over the Fed’s independence.

Commodity Market Summary

Oil prices fell more than 2% in early Asian trade as geopolitical risk premiums eased following comments from US President Donald Trump that reduced fears of near-term military action against Iran. The pullback was compounded by larger-than-expected rises in US crude and gasoline inventories and signs that Venezuelan production and exports are recovering. OPEC maintained a broadly balanced medium-term supply-demand outlook, while strong Chinese import data highlighted resilient demand. Gold retreated as investors took profits after recent record highs, with softer geopolitical rhetoric reducing near-term safe-haven demand.

Anheuser-Busch InBev SA/NV (ANH) +3.13%

Anheuser-Busch InBev reported continued execution of its share buy-back programme announced in October 2025, repurchasing 578,533 shares between 7 and 9 January 2026 at an average price of €55.54, for a total consideration of €32.1 million. Since inception in early November, the group has bought back 7.0 million shares for €377.2 million, equivalent to 0.35% of shares outstanding. The programme reflects disciplined capital allocation and management’s confidence in underlying cash-flow generation and balance-sheet resilience.

Northam Platinum Holdings Limited (NPH) +2.48%

Northam reported a solid operational performance for the six months ended December 2025, with total equivalent refined PGM production from own operations rising 3.7% year on year to 467,818 oz 4E, supported by gains at Zondereinde, Booysendal and a strong ramp-up at Eland. Chrome concentrate output increased 14.8% to 822,759 tonnes, driven by Booysendal and Eland. Third-party PGM volumes rose 39.7%. Management highlighted ongoing productivity improvements, logistics normalisation and progress on key infrastructure and development projects across the portfolio.

Wells Fargo & Company (WFC) -4.61%

Wells Fargo reported mixed fourth-quarter results, missing profit expectations after booking $612 million in severance costs linked to ongoing workforce reductions under CEO Charlie Scharf. Net interest income rose 4% year on year to $12.33 billion but fell short of consensus, while earnings of $1.62 per share missed forecasts. Management guided 2026 net interest income of around $50 billion, slightly below expectations. With the regulatory asset cap lifted, the bank is targeting mid-single-digit loan growth, tighter cost control and expansion in fee-based and digital-driven businesses.

Citigroup Inc. (C) -3.34%

Citigroup delivered a stronger-than-expected fourth-quarter performance, driven by a sharp rebound in dealmaking and improved corporate client activity. Investment banking fees rose 35% year on year, while banking unit revenue surged 78%, underpinning adjusted earnings of $1.81 per share, ahead of consensus. Net interest income increased 14%, and wealth management revenues advanced 7%. Progress on regulatory remediation and ongoing portfolio simplification supported sentiment, although returns remain below medium-term targets. Management highlighted sustained M&A momentum, expanding prime brokerage activity and further efficiency gains through restructuring and automation.

Bank of America (BAC) -3.78%

Bank of America delivered a fourth-quarter earnings beat, supported by strong trading performance and record net interest income amid volatile markets. Sales and trading revenue rose 10% year on year, while net interest income increased 9.7% to $15.75 billion, benefiting from asset repricing and lower deposit costs. Management expects net interest income to rise 7% in the current quarter and reiterated full-year growth guidance of 5% to 7% for 2026. Loan growth was broad-based, and wealth management revenues rose 10%, reflecting resilient consumer and asset inflows.

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