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MARKET COMMENTARY

LOCAL MARKET COMMENTARY

On the local stock market, the Top 40 index, as well as the broader All Share index, saw increases of 1.06% and 0.93%, closing at 73,142 and 79,361 points, respectively. South African retail sales rebounded, rising by 2.3% year on year in March following a revised 0.7% decline in February, according to Statistics South Africa. Meanwhile, enX Group, a company specializing in petrochemicals, equipment, and logistics, reported a robust first-half performance, with earnings doubling.

EUROPEAN MARKET COMMENTARY

European markets concluded Wednesday's session on a positive note, with the pan-European Stoxx 600 index closing 0.6% higher. Most sectors and major bourses showed gains, with utilities stocks leading the way, up 1.7%. However, oil and gas stocks experienced a 0.9% decline. Notably, Dutch bank ABN Amro's shares dropped by 6% despite announcing a 29% rise in first-quarter net profits.

US MARKET COMMENTARY

Wall Street's three major indexes reached record highs on Wednesday, with the S&P 500 and Nasdaq both climbing over 1%. This surge was driven by a smaller-than-expected increase in consumer inflation, raising investors' hopes for interest rate cuts by the Federal Reserve. Technology stocks led the gains, while data showed the consumer price index (CPI) rose by 0.3% in April, below the expected 0.4%. Additionally, U.S. retail sales were flat in April, suggesting that consumer spending is slowing down due to higher gasoline prices.

ASIA MARKET COMMENTARY

Asia-Pacific markets rose this morning despite Japan's first-quarter GDP contracting at an annualized rate of 2%, which was worse than the expected 1.5%. This could disrupt the Bank of Japan's plans to raise interest rates. Japan's Nikkei 225 increased by 0.77%, while the Topix slightly declined by 0.18%. Hong Kong's Hang Seng index went up by 0.27% after a holiday, and Mainland China's CSI 300 index rose by 0.1%. In South Korea, after resuming trading post-holiday, the Kospi jumped by 1% and the Kosdaq by 1.04%.

CURRENCY MARKET COMMENTARY

South Africa's rand maintained its gains on Wednesday, supported by positive domestic retail sales data and a favourable U.S. inflation report. This morning, the dollar fell to multi-month lows as U.S. core inflation slowed to its lowest in three years, increasing expectations for rate cuts and leading to speculation that the dollar may have peaked for now.

COMMODITY MARKET COMMENTARY

Gold prices edged higher this morning after a significant rise in the previous session, driven by a weaker dollar and bond yields due to growing expectations of U.S. Federal Reserve rate cuts by September. Oil prices also continued to climb, supported by signs of stronger demand in the U.S. where lower-than-expected inflation data strengthened the case for an interest rate cut, potentially boosting consumption further.

LOCAL COMMENTARY

Coronation Fund Managers Limited (CML) -0.21%

For the period ending March 31, 2024, fund management earnings per share are projected to be between 183.5 and 186.1 cents, a significant increase from the 13.0 cents loss per share in the same period last year. This measure excludes the impact of market value changes and foreign exchange on investment securities. Additionally, earnings per share (EPS), headline earnings per share (HEPS), and diluted headline earnings per share (DHEPS) are expected to be between 199.7 and 200.9 cents, up from 6.2 cents per share last year. This includes a 14.7 cents per share gain from unrealized fair value and foreign exchange impacts, compared to a 19.2 cents gain in the prior period.

Universal Partners Limited (UPL) +0.00%

For the quarter ending March 31, 2024, the net asset value per share (NAV) was 1.293 GBP, down from 1.420 GBP in the same quarter last year. The loss for the quarter was GBP 268,468 compared to GBP 720,072 in the prior year's quarter. The loss per share was 0.37 pence, down from 0.99 pence. For the nine months ending March 31, 2024, the loss was GBP 202,470 compared to GBP 1,311,252 for the same period last year, with a loss per share of 0.28 pence, down from 1.80 pence. For the year ended June 30, 2023, the NAV was 1.296 GBP, with a total loss of GBP 3,062,172 and a loss per share of 4.21 pence. Headline loss per share mirrored these figures.

enX Group Limited (ENX) +4.63%

Revenue from continuing operations increased by 5% to R2.117 billion, up from R2.019 billion in 2023. Headline earnings per share (HEPS) from continuing operations rose by 110% to 61 cents per share, compared to 29 cents per share in 2023. Profit before tax from continuing operations grew by 70% to R141 million, up from R83 million last year. The net asset value per share slightly decreased to R13.86 from R13.91 as of 31 August 2023.

Santova Limited (SNV) +0.27%

Headline earnings per share dropped by 20.1% to 123.77 cents per share. Profit for the period decreased by 30.1% to R147.3 million. However, the tangible net asset value per share increased by 27.3% to R6.11. Revenue and net interest income fell by 4.5% to R637.8 million.

INTERNATIONAL COMMENTARY

Poste Italiane SpA (PST) -1.31%

Poste Italiane's operating profit fell 8% in the first quarter to 706 million euros, down from 767 million euros last year, despite a slight increase in revenue. This decline was due to gains from selling Italian government bonds in the previous year. However, the profit exceeded analyst forecasts of 692 million euros. Shares in Poste Italiane fell 0.9% to 12.44 euros after hitting a record high earlier in the session. Excluding bond trading, operating profit rose 14%, and the company is on track to meet its financial targets. Revenues increased by 0.7% to 3.05 billion euros, in line with forecasts. Italy plans to privatize further by selling its 29.3% stake in Poste while retaining control through a 35% stake held by state bank Cassa Depositi e Prestiti (CDP). This sale is part of Italy's strategy to raise 20 billion euros from asset sales by 2026 to reduce its high public debt.

ABN AMRO Bank N.V. (ABN) -6.11%

ABN AMRO's shares fell 3% after the bank reported a weaker capital ratio in the first quarter due to an increase in risk-weighted assets, overshadowing better-than-expected net profits. The CET1 ratio, a key measure of capital strength, dropped to 13.8% from 15.0% last year, missing analysts' estimates of 14.3%. Despite this, ABN AMRO's net profit rose 29% to 674 million euros, benefiting from high interest rates, surpassing the forecast of 521 million euros. Net interest income fell 2% to 1.59 billion euros but exceeded expectations of 1.56 billion euros. The bank anticipates maintaining net interest income at 6.3 billion euros and expects costs of 5.3 billion euros for the year due to higher staff expenses.

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About the Author

Research Team
Media, Sasfin Wealth

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