Micron tops revenue expectations on AI demand but higher capex weighs on shares

South African Market Summary

South African equities retreated sharply, with the JSE All Share Index falling 3.02% to 113,709.76 points and the Top 40 declining 3.37% to 105,887.18 points, reflecting heightened global risk aversion. Headline inflation eased to 3.0% year-on-year in February, reaching the SARB’s target, although the trajectory may prove temporary amid rising geopolitical tensions and potential fuel price shocks linked to Middle East conflict. National Treasury flagged limited fiscal capacity to offset higher fuel costs. Meanwhile, Eskom proposed wage increases of up to 6.5% annually, signalling ongoing cost pressures within the energy sector.

European Market Summary

European equities reversed earlier gains, with the STOXX 600 declining 0.70% to 598.25 as rising oil prices, triggered by an attack on Iran’s Pars gas field, reignited geopolitical concerns. The move reflects a shift towards risk-off positioning as investors reassess inflation and growth implications. Austria announced temporary fuel tax cuts and margin caps to mitigate consumer pressure. Meanwhile, IMF engagement with Ukraine underscores ongoing fiscal strain, while ECB commentary highlights that markets may be underpricing geopolitical risks, increasing the potential for volatility.

US Market Summary

Wall Street closed sharply lower as the Federal Reserve maintained rates and signalled only one potential cut in 2026, reflecting caution amid rising geopolitical risks and oil-driven inflation pressures. Updated projections and Chair Jerome Powell’s commentary highlighted increased uncertainty linked to Middle East conflict. Producer Price Index inflation surprised to the upside at 3.4% year-on-year, reinforcing concerns around cost pressures from higher energy and shipping costs. While volumes were slightly below average, market sentiment weakened as investors reassessed the policy path and inflation outlook.

Asian Market Summary

Asia-Pacific markets declined, tracking Wall Street losses as global risk sentiment deteriorated. Hong Kong’s unemployment rate improved marginally to 3.8%, signalling modest labour market resilience. In Australia, stronger-than-expected employment growth of 48,900 in February was offset by a higher jobless rate, offering limited clarity for monetary policy. Escalating Middle East tensions have triggered fuel supply concerns, with panic buying contributing to localised shortages, highlighting Australia’s reliance on imports. The backdrop underscores rising geopolitical risks and potential inflationary pressures across the region.

Currency Market Summary

The South African rand depreciated sharply, despite stronger-than-expected domestic inflation and retail sales data, as a firmer US dollar and rising oil prices weighed on sentiment. The dollar strengthened following the Federal Reserve’s decision to hold rates and signal only one cut this year, alongside higher inflation projections linked to Middle East tensions. The yen also weakened towards a two-year low as the Bank of Japan maintained its policy stance. The move highlights broad dollar strength and increasing pressure on emerging market currencies.

Commodity Market Summary

Oil prices rose sharply, gaining up to 3% as escalating conflict between Iran, the U.S. and Israel disrupted key energy infrastructure across the Middle East, including LNG and gas facilities in Qatar, the UAE and Saudi Arabia. Heightened geopolitical risk has intensified supply concerns, supporting crude prices. Gold rebounded from a one-month low, aided by a weaker dollar, although gains were capped by a more hawkish Federal Reserve stance limiting expectations for near-term rate cuts. The backdrop reinforces elevated volatility across energy and safe-haven assets.

Astral Foods Limited (ARL) +0.53%

Astral expects robust interim results for the six months to 31 March 2026, supported by strong poultry demand, higher broiler volumes and a recovery in selling prices following 2024 deflation. Improved margins reflect lower feed input costs and disciplined cost control, while the Feed Division benefitted from increased internal and external volumes. Farming efficiencies further supported performance, with no material disruptions reported. EPS is expected to rise by at least 365% to R21.95, with HEPS up at least 435% to R21.88, underscoring a significant earnings recovery and a strengthened balance sheet.

Sabvest Capital Limited (SBP) +0.72%

Sabvest Capital reported a robust FY2025 outcome, with net asset value per share increasing 21.9% to 16,105 cents, supported by solid performance across its diversified investment portfolio. Earnings and headline earnings per share rose 27.7% to 2,967.3 cents, while total comprehensive income advanced 24.9% to R1.12 billion. Shareholders’ funds and gross assets grew approximately 19%, reflecting portfolio revaluations and disciplined capital allocation. A 23.8% increase in dividends to 130 cents underscores strong cash generation. Net debt increased but remains manageable, supporting continued investment deployment.

Master Drilling Group Limited (MDI) 0.00%

Master Drilling expects FY2025 EPS to increase materially, rising 63.1%–73.0% to 343.9–364.7 cents, primarily driven by non-cash adjustments. In USD terms, EPS is projected to grow 66.9%–77.4%, reflecting similar dynamics. However, underlying performance remains broadly stable, with HEPS expected to range between a 6.9% decline and a 3.0% increase in ZAR, and between a 4.5% decrease and a 5.6% increase in USD. The divergence between EPS and HEPS highlights limited operational earnings growth despite headline profitability expansion.

PPC Limited (PPC) +8.41%

PPC reported continued operational momentum for the ten months to 31 January 2026, reflecting sustained benefits from its “Awaken the Giant” turnaround strategy. Group revenue increased 4%, while EBITDA rose 32% (22% adjusted), driving margin expansion to 21.0% (19.4% adjusted). Performance was supported by improved efficiencies across logistics, procurement and plant operations in South Africa, alongside strong cash flow generation and execution progress in Zimbabwe. The results highlight structurally improving profitability, with disciplined execution underpinning sustainable earnings growth and enhanced operational leverage.

Micron Technology Inc. (MU) +0.01%

Micron forecast third-quarter revenue of approximately $33.5 billion, well above expectations, supported by robust demand for AI-driven memory chips and tighter supply conditions, following a strong second-quarter beat. However, shares declined in extended trading as the group increased its FY2026 capital expenditure plan by $5 billion, with total spend exceeding $25 billion and rising further into 2027. The higher investment reflects capacity expansion, including a new fabrication facility and DRAM output growth. A 30% dividend increase signals confidence, although elevated capex may weigh on near-term free cash flow.

General Mills (GIS) -2.97%

General Mills reaffirmed its FY guidance despite ongoing demand pressures, with management expecting adjusted earnings to decline 16%–20% and organic sales to fall 1.5%–2%. The outlook reflects constrained consumer spending, intensified competition and evolving dietary preferences, including the impact of GLP-1 weight-loss drugs on food consumption patterns. Third-quarter performance was mixed, with revenue of $4.44 billion marginally ahead of expectations, but adjusted EPS of 64 cents missed forecasts. North American retail sales declined notably, underscoring volume pressure, while shares remain down year-to-date amid sector-wide weakness.

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