Palo Alto Networks trims FY26 profit view on acquisition costs, lifts revenue outlook

South African Market Summary

South African equities weakened, with the JSE All Share declining 1.3% to 119,410.04 and the Top 40 falling 1.4% to 111,292.81, reflecting cautious sentiment. Macro data showed a modest improvement in unemployment to 31.4% in Q4, the lowest in over five years, supported by gains in services, construction and finance. Policy developments remain in focus, with the SARB proposing a shift away from the prime lending rate towards the repo rate as the benchmark. Meanwhile, Eskom wage negotiations remain unresolved despite operational improvements and a return to profitability.

European Market Summary

European equities closed higher, with the STOXX 600 gaining 0.5% to 621.29, supported by strength in financials and healthcare, while Switzerland’s SMI reached a record high. The FTSE 100 also advanced to a new peak, aided by signs of a cooling UK labour market, where rising unemployment and moderating wage growth strengthened expectations for a near-term rate cut. However, softer metal prices weighed on mining stocks. In Germany, investor sentiment declined unexpectedly, though still signals a gradual and uneven economic recovery trajectory.

US Market Summary

US equities edged higher in volatile trade, supported by a rebound in technology stocks and strength in financials, as investors positioned ahead of key inflation data. Focus now turns to the upcoming PCE report, the Federal Reserve’s preferred inflation gauge, for signals on the rate-cut trajectory. Recent softer inflation prints have lifted expectations, with markets pricing a roughly 63% probability of a June rate cut. However, Fed officials maintained a cautious stance, emphasising the need for sustained disinflation and monitoring emerging labour market vulnerabilities.

Asian Market Summary

Asian markets traded modestly higher despite ongoing global concerns around AI-driven volatility, while oil prices weakened amid signs of progress in US-Iran nuclear negotiations. Regional activity was subdued, with several major markets closed for Lunar New Year. In Japan, manufacturer sentiment improved for the first time in three months, supported by stronger machinery orders and a weaker yen, signalling tentative economic stabilisation. Meanwhile, the Reserve Bank of New Zealand held rates steady at 2.25%, reinforcing an accommodative stance to support a fragile recovery.

Currency Market Summary

The South African rand weakened further as a resilient US dollar outweighed a modest improvement in domestic labour data, highlighting ongoing external pressure on the currency. The dollar remained firm amid persistent geopolitical uncertainty and ahead of Federal Reserve minutes, with markets seeking clarity on the rate-cut path. In Asia, the yen held steady following improved manufacturing sentiment in Japan, while the New Zealand dollar softened after the Reserve Bank of New Zealand maintained an accommodative policy stance, reinforcing divergence across global monetary settings.

Commodity Market Summary

Oil prices edged lower as progress in US-Iran nuclear negotiations eased geopolitical risk premiums and reduced concerns around Middle East supply disruptions. Additional pressure came from rising output at Kazakhstan’s Tengiz field and expectations of a build in US crude inventories. In contrast, product inventories are forecast to decline, signalling mixed demand dynamics. Gold fell more than 2%, weighed down by reduced safe-haven demand and a stronger US dollar, as improving geopolitical sentiment and shifting rate expectations tempered investor appetite for defensive assets.

BHP Group Limited (BHG) +0.33%

BHP reported a strong half-year performance for the period ended 31 December 2025, with revenue increasing 11% to $27.9 billion and headline earnings rising to $5.7 billion. Headline earnings per share advanced 30% to 112.0 US cents, reflecting improved operational performance and supportive commodity pricing. Basic EPS increased 28%, while disciplined cost management and limited impairments supported profitability. The group declared an interim dividend of 73 US cents per share, up 46% year on year, underscoring robust cash generation and a continued commitment to shareholder returns.

MTN Group Limited (MTN) +0.08%

MTN announced an agreement to acquire the remaining 75.3% stake in IHS Holding Limited not already owned, with the transaction structured to secure only IHS’s African operations. The deal is expected to enhance MTN’s strategic positioning, delivering operational synergies while being accretive to net income and cash flow. The all-cash transaction will be funded through IHS cash balances and MTN funding sources, aligning with the group’s disciplined capital allocation framework. MTN has secured support representing approximately 40% of IHS voting shares, strengthening execution certainty.

Sibanye Stillwater Limited (SSW) -3.45%

Sibanye-Stillwater reported its Mineral Resources and Mineral Reserves as at 31 December 2025, highlighting a diversified and long-life asset base. South African PGM reserves increased 4.7% to 29.4Moz, supported by the inclusion of the Marikana E4 project, while US PGM reserves rose modestly. Gold resources declined materially, reflecting operational constraints and reserve write-downs at Kloof. Lithium and zinc resources decreased following disposals and depletion, while uranium reserves were declared for the first time. The update underscores portfolio optimisation and ongoing resource conversion to sustain production visibility.

Sirius Real Estate Limited (SRE) +2.01%

Sirius Real Estate announced a proposed capital raise of approximately £75 million, alongside a £2 million retail offer, to fund near-term acquisition opportunities in Germany valued at around €130 million. The raise, representing roughly 5% of issued share capital, will support the acquisition of defence-related industrial assets with an attractive blended EPRA net initial yield of 7.6%. The transaction aligns with Sirius’s acquisition-led growth strategy, targeting resilient German and UK markets. Proceeds are expected to be deployed by Q2 2026, reinforcing earnings growth and portfolio optimisation.

Tsogo Sun Limited (TSG) -6.58%

Tsogo Sun executed a general share repurchase via the JSE order book, resulting in the cancellation of 22.4 million shares, with a further 10.1 million shares pending delisting. The repurchase, funded from available cash resources, was conducted partly during a prohibited period under a pre-approved programme. Management confirmed no material impact on financial information beyond a reduction in cash balances. The board reaffirmed the group’s solvency and liquidity position, highlighting sufficient capital, reserves and working capital to support operations over the next 12 months.

Medtronic Plc (MDT) -3.10%

Medtronic reported third-quarter results ahead of expectations, with revenue rising to $9.02 billion and adjusted EPS of $1.36, supported by strong demand for cardiovascular devices, particularly its pulsed field ablation portfolio. Cardiovascular sales increased 13.8%, although ablation growth, while robust, lagged buyside expectations. Despite the earnings beat, shares declined after the company maintained full-year adjusted EPS guidance of $5.62–$5.66, implying slower fourth-quarter growth amid higher tax costs and tariff pressures. Management expects continued procedure recovery, while competitive dynamics in patient monitoring remain broadly unchanged.

Palo Alto Networks Inc. (PANW) -2.07%

Palo Alto Networks lowered its fiscal 2026 profit outlook, guiding adjusted EPS to $3.65–$3.70, as acquisition-related costs linked to its AI-driven expansion strategy weighed on margins. The group continues to invest heavily, including recent acquisitions of CyberArk and Chronosphere, driving elevated integration and restructuring expenses. Despite this, revenue momentum remains strong, with full-year guidance raised to approximately $11.3 billion, supported by heightened demand for cybersecurity solutions. Second-quarter EPS beat expectations, but weaker near-term profitability guidance and execution risks around integration pressured the share price.

Bayer AG (BAYN) +7.35%

Bayer announced a proposed settlement of up to $7.25 billion to resolve a substantial portion of ongoing and future Roundup-related litigation in the US, covering approximately 65,000 claims. The agreement introduces a long-term claims framework funded over up to 21 years and is designed to limit future liabilities without admission of wrongdoing. While provisions are expected to increase materially, with litigation liabilities rising to €11.8 billion and negative free cash flow anticipated in 2026, the announcement was positively received by the market. Final resolution remains contingent on court approval and a pending US Supreme Court ruling.

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