PepsiCo beats Q2 estimates as demand for healthier snacks and drinks lifts sales

South Africa

South African equities posted modest gains, with the JSE Top 40 up 0.35% to close at 89,613 points and the All Share up 0.3% to 97,353.3 points, despite soft June retail sales that underscored weak consumer demand. However, rising May iron-ore output supported the GDP outlook. Policy concerns are mounting after Old Mutual flagged a growing gambling issue as a socioeconomic risk. Treasury-linked groups are pushing for tax reforms that avoid burdening low-income households ahead of fiscal planning. Fiscal support and policy discipline will be crucial to maintaining macro stability and investor confidence. Markets appear cautiously optimistic but are still closely tied to commodity trends and fiscal credibility amid social pressures and weak household balance sheets.

Europe

European markets were steady amid trade and inflation tensions. The EU is preparing tariff concessions on autos to reduce US friction, but Trump’s 30% tariff threat still clouds the export outlook. UK inflation surprised to the upside at 3.6%, likely delaying Bank of England rate cuts. Eurozone trade data was stronger, with exports—particularly machinery and chemicals—lifting the surplus. European equities followed US gains but remain sensitive to macro policy signals. Criticism is growing over the EU’s climate spending, with analysts calling for more R&D and less subsidy-heavy frameworks to preserve competitiveness. Investors are navigating trade diplomacy, inflation risk, and climate policy implications.

US

US stocks hit fresh highs, supported by strong June retail sales (+0.6%), stable jobless claims, and upbeat earnings. Notably, PepsiCo and TSMC posted strong results, and United Airlines beat revenue forecasts. Corporate buybacks remain a tailwind—Citadel Securities estimates nearly $1 trillion in repurchases this year. However, the Fed’s Beige Book noted rising input costs from tariffs, with some pass-through to consumers, raising future inflation concerns. Fed officials highlighted housing’s outsized role in inflation. Politically, Trump’s renewed criticism of Fed Chair Powell stirred uncertainty but had limited market impact. Markets continue to reflect underlying economic strength and earnings momentum, but risks include persistent inflation and potential Fed leadership shifts.

Asia

Asian markets rose cautiously on global optimism despite regional headwinds. Japan’s core CPI eased to 3.3% but stayed above target, keeping BoJ tightening pressure intact. In China, a US–China Business Council survey showed most US firms plan no new 2025 investment due to geopolitical concerns; over a quarter may relocate. Australia’s NAB business index hit a post-2020 low, reflecting weak retail sentiment. Despite this, tech-led sectors outperformed, especially in China and ASEAN, lifted by AI-driven global equity gains. Comments from NY Fed President Williams on trade and policy were closely tracked by regional investors. The investment backdrop remains mixed—Japanese inflation, Chinese consumer weakness, and Australian growth softness are offset by selective opportunities in tech and export-oriented names.

Commodities

Oil prices remained firm, supported by strong US demand and supply risks. Gold traded in a tight range, showing resilience above US$2,400/oz amid inflation concerns and central bank buying. Silver stayed technically weak, with value potential near US$35.70. Coffee prices (Arabica and Robusta) fell on poor momentum. The USDA pledged $80 million to support US timber markets, boosting forestry-linked assets. Livestock futures were stable. Commodity markets remain broadly range-bound, with investors seeking selective exposure—particularly in energy, gold, and timber—while awaiting macro clarity from Fed policy and China demand trends.

Currencies

Currency markets showed modest moves amid diverging central bank paths and political risks. The rand held steady despite the poor sales data, reflecting resilience among emerging market currencies. Investors are watching a diverging narrative: mining and export-linked sectors remain relatively strong, while consumer-facing industries continue to lag. The US dollar held firm on strong economic data and rising doubts over Fed cuts, fuelled by Trump’s criticism of Fed Chair Powell. EM currencies were mixed—the rand and peso performed well, while the Australian dollar slipped on soft business sentiment. The yen stayed weak, with BoJ tightening speculation ahead of elections. Sterling fell after UK inflation surprised at 3.6%, complicating BoE policy.

Super Group Limited (SPG) +1.04%

Super Group announced that the Public Investment Corporation (PIC) has increased its beneficial interest to 21.214%, crossing a disclosure threshold under the Companies Act and JSE Listings Requirements. The required notifications have been filed with the Takeover Regulation Panel. The PIC’s increased holding signals growing institutional involvement and may result in greater influence over corporate governance and strategic direction.

Absa Group Limited (ABG) +0.14%

Absa disclosed trades by its Employee Incentive Trust related to equity-settled incentive schemes. While routine, such activity reflects ongoing remuneration execution and insider participation. Additionally, the group confirmed regulatory approval of Arrie Rautenbach’s interim CEO appointment and announced changes to board committee compositions. These governance adjustments are relevant in the context of Absa’s ongoing leadership transition and may influence investor sentiment around executive stability, succession planning, and board oversight—key areas for institutional risk assessment and stewardship evaluation.

 Acsion Limited (ACS) 0.00%

Acsion withdrew its prior cautionary announcement, confirming that discussions or developments previously under consideration have concluded without requiring further disclosure. The withdrawal removes short-term uncertainty and reduces the likelihood of near-term corporate action. While this restores focus to the company’s operational performance, the absence of a material event may be interpreted as a missed strategic opportunity, depending on investor expectations tied to the original notice.

United Airlines Holdings Inc. (UAL) +3.11%

United Airlines posted Q2 revenue of $14.6 billion, falling short of consensus estimates by approximately 2%, due primarily to flight cancellations and operational disruptions in late June caused by severe weather and staffing shortages. However, adjusted earnings per share came in at $5.04, slightly ahead of forecasts, supported by better-than-expected unit cost control and improved load factors. Notably, management maintained its full-year earnings guidance in the range of $9 to $11 per share, aligning with analyst expectations and reflecting confidence in demand stabilisation into H2. Bookings for both domestic and transatlantic routes remain strong, with business travel slowly improving and premium cabin load factors trending higher. Capacity is expected to grow moderately, with a continued focus on operational resilience and route profitability.

PepsiCo Inc. (PEP) +7.45%

PepsiCo’s Q2 revenue rose 1.2% year-on-year to $23.6 billion, beating consensus expectations by roughly $300 million, driven by solid growth in non-carbonated beverages, including the Gatorade and Celsius brands, and continued demand for healthier snack options. Organic revenue growth stood at 4.5%, offsetting volume declines in some developed markets. Frito-Lay North America and Quaker Foods segments both saw high-single-digit revenue growth despite inflationary pressures. Gross margin expanded by 120 basis points year-over-year, reflecting pricing power and improved supply chain efficiency. Management maintained full-year guidance for 4% organic revenue growth and 8% core EPS growth, citing strong consumer engagement and favourable brand momentum.

Taiwan Semiconductor Manufacturing Company Limited ADR (TSM) +3.38%

TSMC reported Q2 net income of NT$264.5 billion ($20.6 billion), with high-performance computing and automotive segments contributing meaningfully to the growth. The company raised its full-year revenue growth forecast to around 30%, up from previous guidance of mid-20s, citing ongoing structural demand in generative AI and 3nm node uptake. Capex guidance was maintained at $32 billion, reflecting disciplined investment in advanced manufacturing capacity.

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