Citi Beats Q1 Forecasts with 21 Percent Profit Jump, Warns on Tariff Risks

Local Market Commentary

The FTSE/JSE Top 40 Index advanced 0.95% on Tuesday, closing at 82,324.6 points, while the broader All Share Index gained 0.91% to finish at 89,521.8 points. In its biannual monetary policy review, the South African Reserve Bank (SARB) cautioned that the scope for further monetary easing has diminished amid a highly uncertain global environment. The SARB highlighted the ongoing global trade tensions, notably those stemming from the US-China trade war initiated under former US President Donald Trump, as a significant risk to global and domestic economic activity. While the central bank projects inflation to ease to 3.6% in 2025 from 4.4% in 2024, it noted a marked decline in confidence regarding the medium-term outlook due to persistent international trade frictions and elevated domestic uncertainties. February’s consumer inflation came in at 3.2%, within the SARB’s 3%–6% target range but below its midpoint.

European Market Commentary

European equities advanced on Tuesday, with the pan-European STOXX 600 climbing 1.6% as investors monitored rapidly evolving U.S. tariff developments. Italy’s FTSE MIB led regional gains with a 2.4% increase. However, luxury stocks lagged, with LVMH shares falling sharply after the sector heavyweight missed Q1 sales expectations amid subdued demand in the U.S. and China. Market focus now shifts to the European Central Bank’s policy meeting on Thursday, where a 25-basis-point rate cut is broadly anticipated. Meanwhile, German investor sentiment fell sharply in April—its steepest drop since the onset of the Russia-Ukraine conflict—according to the ZEW Institute, reflecting heightened unease over U.S. trade policy.

U.S. Market Commentary

U.S. equities closed slightly lower on Tuesday as persistent tariff uncertainty weighed on market sentiment, particularly affecting consumer and healthcare stocks. Boeing dragged the Dow Jones Industrial Average after falling 2.4%, following reports that China halted new deliveries of its jets in retaliation to U.S. tariff hikes. The auto sector also faced headwinds, with Ford down 2.7% and General Motors slipping 1.3%, after Barclays downgraded the industry citing earnings risks from potential tariffs. Despite some support from upbeat bank earnings, the S&P 500’s consumer discretionary index lost 0.8%. Technical analysts flagged a bearish signal as the S&P’s 50-day moving average crossed below its 200-day line, forming a "death cross" that may indicate a deepening correction.

Asia Market Commentary

Asia-Pacific equities traded mostly lower on Wednesday as investors digested Wall Street’s overnight decline and ongoing U.S. tariff concerns. Despite the cautious mood, China reported a stronger-than-expected 5.4% GDP growth for Q1 2025, surpassing Reuters’ forecast of 5.1%, underpinned by sustained policy support. March retail sales jumped 5.9% year-on-year, beating estimates of 4.2%, while industrial output rose 7.7%, outpacing the 5.8% consensus. However, lingering global uncertainty has led investment banks to revise down their full-year outlook for China’s economy.

Currency Market Commentary

The South African rand weakened on Tuesday following a warning from the South African Reserve Bank that room for monetary easing had diminished amid global uncertainty. Meanwhile, the U.S. dollar held modest gains this morning as markets paused after sustained selling pressure and awaited developments in U.S. trade negotiations. The euro, which touched a three-year high last week, softened slightly in early trading.

Commodity Market Commentary

Gold prices surged to a fresh all-time high today as a weaker dollar, deepening U.S.-China trade tensions, and global growth fears drove investors towards safe-haven assets. In contrast, oil prices edged lower as tariff uncertainty clouded the economic outlook, pressuring energy demand. The International Energy Agency now expects global oil demand to grow by just 730,000 barrels per day in 2025—its slowest pace in five years—down sharply from last month’s 1.03 million bpd forecast. Rising U.S. production is also set to decelerate, while continued output increases from OPEC+ have contributed to a 13% drop in oil prices month-to-date.

Quantum Foods Holdings Limited (QFH) 0.00%

In accordance with the JSE Limited Listings Requirements, Quantum Foods Holdings Limited has advised that, for the six months ended 31 March 2025, it expects a material increase in both headline earnings per share (HEPS) and earnings per share (EPS), exceeding the 20% threshold required for a trading statement. HEPS is forecast to rise by at least 46.3 cents to 68.0 cents, compared to 21.7 cents in the prior corresponding period, while EPS is expected to increase by at least 45.9 cents to 68.0 cents, from 22.1 cents previously. A further trading statement will be issued once there is sufficient certainty regarding the earnings range. As noted in the voluntary operational update published on SENS on 17 February 2025, there were no material changes in operations for the subsequent two-month period ended 31 March 2025. The directors take responsibility for the financial information in this announcement, which has not been reviewed or audited. Interim results are anticipated to be released on SENS in due course.

Santam Limited (SNT) +1.73%

Santam Limited and Sanlam Life Insurance Limited have announced that all conditions precedent have been fulfilled for Santam’s acquisition of Sanlam Life’s 60% stake in the A1 ordinary shares of NMS Insurance Services (SA) Limited. The transaction, originally detailed in a SENS announcement on 28 November 2024, will become effective on 2 May 2025. On that date, Sanlam will receive an initial cash consideration of R925 million, with a potential earn-out payment as disclosed in the original terms.

Citigroup Inc. (C) +1.76%

Citigroup exceeded Wall Street expectations for Q1 2025, reporting a 21% increase in net income to $4.1 billion, or $1.96 per share, surpassing analyst estimates of $1.85. The bank benefited from a 23% rise in stock trading revenue, driven by heightened market volatility and investor reallocation amid U.S. tariff uncertainties and competition from Chinese AI startup DeepSeek. Investment banking revenue also grew by 12%, largely from M&A advisory. However, executives cautioned that U.S. tariff policies and economic uncertainty could dampen activity in the coming quarters. Citi also raised its provisions for loan losses, anticipating a tougher economic environment, although borrower delinquencies remain within expectations.

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