Alphabet hits $3 trillion milestone, fuelled by AI optimism and strong cloud growth

South Africa

The Top 40 index added 0.27% yesterday to reach 97,295.8 points, while the All Share index gained 0.21% to close at 104,675.4 points. South Africa's long-term inflation expectations dropped to a record low of 4.2%, following the central bank’s push towards a formal 3% inflation target, diverging from its 3–6% range. Short-term forecasts for 2025 and 2026 were also revised downward. The SARB’s stance, despite lacking finance ministry approval, signals a tightening bias. Meanwhile, Naspers announced a five-for-one share split effective 6 October 2025, approved at its recent AGM. Separately, proposed VAT Act changes have triggered warnings from private schools, raising broader concerns about sectoral stability amid potential deregistration requirements.

Europe

European equities rose to near three-week highs, with the Stoxx 600 up 0.42%, driven by gains in luxury and defence stocks ahead of major central bank meetings. LVMH, L’Oréal, and Kering surged, bolstered by renewed M&A speculation following Giorgio Armani’s death and a will favouring industry giants. UBS gained 2.3% amid reports of a potential US redomicile, responding to new Swiss capital rules. However, AstraZeneca fell 3.2% on a downgraded rating and reports of paused UK investments. Investor focus remains sharply on monetary policy direction from the Fed and ECB.

United States

US indices closed higher, with the S&P 500 and Nasdaq hitting intraday record highs ahead of the Fed’s policy meeting. Market consensus expects a 25bps rate cut amid signs of labour market weakness. Tesla rose 3.6% after Elon Musk’s $1bn share purchase, while Alphabet surpassed a $3tn valuation. CoreWeave rallied 7.6% following a $6.3bn guaranteed cloud deal with Nvidia, despite a Kerrisdale short. Meanwhile, Oracle climbed on speculation around a TikTok deal. Fed board dynamics shifted with the Senate’s narrow confirmation of Stephen Miran, who joins the FOMC meeting underway.

Asia

Asian equities advanced, led by Japan’s Nikkei 225 breaching 45,000 for the first time, buoyed by positive signals from US-China trade talks in Spain. A framework for TikTok’s US divestment added to market optimism. South Korea’s Kospi also extended gains, supported by the reversal of a planned capital gains tax hike. Standout gainers included Kolon Mobility (+29.91%) and Nongshim (+16.78%). Meanwhile, Japan’s finance minister hinted at broader sanctions on Russian oil buyers, echoing US calls for G7 action. Regional sentiment remains tightly linked to geopolitical developments and trade policy shifts.

Currencies

The rand remained stable ahead of key domestic CPI data and the SARB meeting. Sterling appreciated against both the dollar and euro, with markets positioning for a dovish Fed and steady BoE. The dollar weakened across the board, nearing multi-month lows versus the euro and pound, as traders priced in a 25bps rate cut by the Fed with a potential 50bps surprise. Markets are now expecting over 80bps in cuts by end-January. President Trump’s renewed calls for aggressive easing added downward pressure to the greenback, intensifying volatility across currency markets.

Commodities

Gold prices hit an all-time high, supported by a weaker US dollar and expectations of a Fed rate cut. Oil extended gains as Ukrainian drone strikes on Russian refineries raised supply concerns, with the conflict’s escalation threatening broader market stability. In defiance of Adani Group’s shipping ban, sanctioned tanker Spartan delivered Russian crude to India’s Mundra port. Meanwhile, analysts forecast US crude and gasoline stockpile declines, with distillates likely rising. The energy market remains finely balanced, driven by geopolitical risk and the anticipated shift in US monetary policy stance.

OUTsurance Group Limited (OUT) +7.26%

OUTsurance Group delivered strong financial results with normalised earnings rising 33.7% to R4.728 billion, underpinned by robust organic growth and a favourable claims environment. Operating profit increased 25.7% to R6.047 billion, while normalised investment income surged 49.1% to R2.290 billion. The group’s normalised ROE improved to 36.4% from 30.7% previously, maintaining a solid solvency multiple of 2.3x. The full-year dividend of 237.6 cents represented a 36.2% increase on prior year, with a payout ratio of 77.6%, complemented by a special dividend of 33.1 cents per share. Gross written premiums increased by 16.8% to R38.782 billion, driven by strong performance across key operating segments.

Oceana Group Limited (OCE) -1.42%

Oceana Group expects a significant 40% decline in both basic EPS and HEPS for the year ending 30 September 2025, primarily due to a halving of average US dollar fish oil sales prices from record levels in the prior year, driven by Peruvian anchovy biomass recovery. Daybrook’s performance has also declined substantially. For the 11 months to 24 August 2025, lower revenue and profitability were reported due to a 50% decline in fish oil sales prices, although Lucky Star foods showed positive results from steady demand and increased production, while hake performance improved with better catch rates and prices, though lower catch rates in South Africa and Namibia impacted horse mackerel results.

Capital Appreciation Limited (CTA) +4.65%

The Group, rebranding to Araxi Limited (share code: AXX), reports mixed performance for H1 2026 amid a subdued South African economy. The Payments division demonstrates strong momentum with robust terminal sales, growing MicroPOS adoption exceeding 25,000 merchants, and expanding annuity revenue exceeding 50% of divisional income. The Software division, while facing slower project conversion due to enterprise caution, secured a strategic AI project with a major bank and implemented cost-saving measures. The Group maintains a strong balance sheet with ample liquidity, supporting organic growth and innovation investments across both divisions, with a positive medium-term outlook driven by AI and cloud capabilities.

Alphabet Inc. (GOOGL) +4.49%

Alphabet achieved a landmark $3 trillion market capitalisation, becoming the third tech giant after Apple and Microsoft to reach this valuation, with its Class A and C shares hitting record highs of approximately $250 after climbing 3.8% and 3.7% respectively. The company’s shares have surged over 32% year-to-date, leading the “Magnificent 7” stocks and significantly outperforming the S&P 500’s 12.5% gain, driven by optimism around AI advancements and a favourable antitrust ruling. The cloud business reported a 32% revenue increase in Q2, exceeding expectations as investments in proprietary chips and the Gemini AI model yield results, while trading at approximately 23 times forward earnings—slightly above its five-year average of 22—making it the most attractively valued among the “Magnificent 7” stocks.

TotalEnergies SE (TTE) +0.88%

TotalEnergies launched the second phase of development at Iraq’s Ratawi oilfield, part of a $27 billion multi-energy project, aiming to boost Iraq’s oil, gas and power production. The initiative, led by TotalEnergies (45%), Basra Oil Company (30%) and QatarEnergy (25%), seeks to increase oil production to 210,000 barrels daily and 163 million cubic feet of gas by 2028. The project includes a seawater treatment plant, gas processing facilities and a 1-gigawatt solar park, aiming to reduce Iraq’s reliance on Iranian imports and attract foreign investment.

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