SOUTH AFRICAN MARKET COMMENTARY

Stocks on the JSE were mostly flat yesterday, the All-Share index rose by a marginal 0.01% to 72,906 and the Top-40 index ended 0.2% up. No major South African economic data releases were due yesterday but recent data has pointed to ongoing weakness in Africa's most industrialised economy, after a bigger-than-forecast fall in the fourth-quarter gross domestic product. In company news, Transaction Capital shares continued to plummet following their poor trading update released on Monday. Shares in the company closed down by about 39.9%.

EUROPEAN MARKET COMMENTARY 

European stocks closed higher following a choppy session yesterday after the European Central Bank (ECB) announced a 50 basis point interest rate hike, despite ongoing volatility in the region’s banks. The Stoxx 600 index initially fluctuated between losses and gains but closed up about 1.3%. Banking stocks rallied 2.6% at the open before dropping to a loss but eventually ended almost 1.2% higher. The ECB proceeded with the rate hike, as previously announced at its prior meeting.

US MARKET COMMENTARY

US stocks climbed yesterday as investors became more positive following news that a group of banks would help First Republic Bank during the industry’s crisis. The crisis could prompt the Federal Reserve to shift its outlook on monetary policy at its meeting next week, and the announcement from Credit Suisse that it will borrow up to $54bn from the Swiss National Bank to assure short-term liquidity also boosted markets. Economic reports showed a significant drop in jobless claims, while building permits and housing starts soared in February.

ASIA MARKET COMMENTARY

Most Asia-Pacific markets rose today as banks pledged a $30 billion deposit in First Republic Bank, lifting confidence in the banking system. Indonesia's central bank kept its 7-day reverse repurchase rate at 5.75% and lending rate at 6.5% to ensure lower inflation expectations and inflation. The bank aims to return the core inflation rate to a ±1% range by H1 2023, and headline inflation in the second half. China's home prices rose 0.3% month-on-month in February, the fastest since July 2021, while Singapore's non-oil domestic exports dropped 15.6% YoY in February but less than expected.

COMMODITY MARKET COMMENTARY

Gold prices rose again today, heading for their third straight week of gains, as the banking crisis drove investors towards the safe-haven asset. On the other hand, oil prices remained relatively stable after a meeting between Saudi Arabia and Russia eased market concerns. However, crude benchmarks were still set to decline for a second consecutive week following the banking crisis that triggered a sell-off in global financial markets. Analysts warned of potential further price drops, which may prompt OPEC+ to cut supplies to avoid a predicted inventory build in Q2.

CURRENCY MARKET COMMENTARY

The rand was firmer yesterday, after plummeting a day earlier when a US banking crisis spread to Europe and led to a sharp deterioration in global risk appetite. At the close, the rand traded at R18.32 against the dollar, about 2.75% stronger. Meanwhile, the dollar weakened today as risk appetite improved following efforts by authorities and banks to alleviate stress in major financial markets. This has taken the pressure off other major currencies that experienced declines earlier in the week due to turmoil in the banking sector. 

LIBSTAR HOLDINGS LIMITED (LBR) +11.35%

The Group saw revenue growth of 10.7%, with 3.0% coming from sales volume increases and 7.7% from pricing and mix changes. However, gross profit margins declined from 22.2% to 20.7% due to load-shedding and other factors, leading to a diluted gross profit growth of 3.7%. Group Normalised operating profit also decreased by 4.1% due to the gross margin decline, with depreciation declining by 2.9%. Normalised EBITDA decreased by 4.1% while operating expenses inflation was limited to 6.3%. Despite this, selling and distribution costs increased by 14.3%, leading to a decrease in Total Diluted HEPS by 12.1%.

ADVTECH LIMITED (ADH) +4.71%

Basic normalised earnings per share (NEPS) for the year ended 31 December 2022 is expected to be between 17% and 22% higher than the comparative reporting period for the year ended 31 December 2021 (‘the comparative period’) or between 142.2 and 148.2 cents per share as compared to 121.5 cents per share in the comparative period. Basic Headline earnings per share is expected to be between 18% and 23% higher than the comparative period or between 143.5 and 149.6 cents per share as compared to 121.6 cents per share in the comparative period. Basic Earnings per share (‘EPS’) for the year ended 31 December 2022 is expected to be between 18% and 23% higher than the comparative period or between 145.3 and 151.4 cents per share as compared to 123.1 cents per share for the comparative period.

CAXTON AND CTP PUBLISHERS AND PRINTERS LIMITED (CAT) +5.33%

The group's interim results for the period ended 31 December 2022 were record-breaking. Profit from operating activities before depreciation and amortisation (EBITDA) rose by R113 million (28.8%) to R505.7 million, and profit from operating activities after depreciation and amortisation increased by R108.7 million (39.8%) to R382.1 million. Revenue increased by R781.7 million (25.8%) to R3 817.4 million due to price increases to offset the unprecedented cost of raw materials and operating expenses, along with continued volume growth in packaging. The newly acquired Amcor flexible business also contributed positively. Operating expenses rose by R105 million to R634.8 million (19.8%), mainly due to inflationary pressures.

Baidu (BIDU) +3.80%

Baidu, a Chinese tech company, unveiled its Chinese-language ChatGPT alternative called Ernie bot during a live-streamed release event. Baidu CEO Robin Li highlighted that the product would improve through user feedback. The initial access to Ernie bot will be prioritized for Baidu's 650 ecosystem business partners, including media companies, banks, and car firms. Within an hour of the announcement, 30,000 corporate clients joined the waitlist for access to the chatbot. However, Baidu's Hong Kong-traded shares fell 6.4% amid a wider fall for Asian stocks, but they are still up 12% for the year so far.

Credit Suisse (CSGN) +18.45%

Credit Suisse shares surged more than 30% at the start of yesterday’s trading session as the bank disclosed its plan to borrow up to $54 billion from the Swiss National Bank. Although the stock's rally tapered off slightly during the day, it still ended up 18.8% as markets closed. Credit Suisse's move to borrow from the Swiss central bank is part of its efforts to strengthen its liquidity position. The bank also offered to buy back around CHF 3 billion of debt. The stock had plummeted to an all-time low earlier in the week after several negative developments, including concerns about contagion and disclosure of "material weakness" in its financial reporting.

FedEx (FDX) +4.48%

FedEx raised its full-year earnings forecast for the fiscal year 2023, as cost-cutting measures helped mitigate continuing demand weakness at its units including FedEx Express. The company now anticipates adjusted earnings per share of $14.60 to $15.20, up from the previous forecast of $13.00 to $14.00. This beat Wall Street's estimates of $13.56, and the stock rose over 11% in after-hours trading. Although the revenue declined slightly year-over-year from $23.6 billion to $22.2 billion, the company reported adjusted earnings per share of $3.41, which surpassed expectations. FedEx plans to continue its cost-saving measures, including laying off officers, directors, and cutting flights, and improving courier efficiency.

Do you prefer a full in-depth report you can read offline? Click here to download the full report.