Walmart beats on sales, flags cautious outlook

South African Market Summary

The JSE closed weaker, with the All Share index declining 0.55% to 121,844.58 points and the Top 40 falling 0.60% to 113,645.42, led by resource sector pressure despite a modest 0.82% gain in the Resources 10 index, while Industrials and Financials eased 0.54% and 0.34% respectively. In corporate developments, South African retailers are accelerating automation, with Woolworths piloting self-service checkouts following Shoprite’s earlier rollout, signalling operational efficiency gains but raising labour concerns. Meanwhile, Standard Bank raised R2 billion via Africa’s first FLAC bond, enhancing capital buffers and supporting financial system resilience.

European Market Summary

European equities closed lower, with the STOXX 600 index declining 0.5% to 625.33 points, retreating from recent record highs as weakness in mining and utilities sectors offset mixed corporate earnings. Updates from Airbus, Rio Tinto and Nestlé provided limited support, while Centrica weighed on sentiment after warning of weaker 2026 trading profits and pausing share buybacks, sending its shares sharply lower. On the macro front, Germany’s January tax revenues fell 3.4% year on year, although underlying trends were more stable, highlighting ongoing fiscal and economic uncertainty across the region.

US Market Summary

Wall Street closed lower, weighed by declines in private equity and select mega-cap names, while industrials provided partial support. Private equity stocks fell after Blue Owl Capital moved to sell $1.4 billion in assets and restrict fund redemptions, raising liquidity concerns. Walmart declined following a cautious FY2027 outlook despite announcing a $30 billion buyback, while ongoing valuation concerns continued to pressure AI-linked technology stocks, including Apple. Macro focus remains on policy direction, with Fed minutes signalling division among policymakers, stable labour data, and markets pricing a roughly 50% probability of a June rate cut ahead of key PCE inflation data.

Asian Market Summary

Asian markets reflected a mixed but constructive backdrop, with South Korea’s Kospi reaching a second consecutive record high, driven by strength in insurance and defence stocks. In Japan, manufacturing momentum improved, with the PMI rising to 52.8—its strongest level in nearly four years—supported by robust domestic and external demand. However, inflation dynamics remain nuanced, with core CPI easing to the Bank of Japan’s 2% target, while underlying measures remain elevated. This divergence underscores a complex policy outlook, as the BoJ balances moderating headline inflation against persistent wage-driven price pressures.

Currency Market Summary

The South African rand weakened against a firmer US dollar, as investors positioned ahead of key US inflation data likely to influence the Federal Reserve’s policy path. The dollar remained on track for its strongest weekly performance since October, supported by resilient economic data, including lower-than-expected jobless claims, and a more hawkish policy outlook. Geopolitical tensions between the US and Iran further underpinned safe-haven demand. The euro also softened, weighed by policy uncertainty, while the dollar index hovered near a one-month high, reinforcing broad-based dollar strength.

Commodity Market Summary

Oil prices advanced to six-month highs, supported by escalating geopolitical tensions between the US and Iran, alongside tightening supply dynamics. Concerns over potential disruptions intensified after the US issued a near-term deadline on nuclear negotiations, while a sharp 9 million barrel drawdown in US crude inventories and constrained exports from key producers further underpinned prices. In contrast, gold traded flat as investors balanced geopolitical risk against broader macro considerations. The commodity backdrop remains sensitive to geopolitical developments and inventory trends, with implications for inflation expectations and resource-linked markets, including South Africa.

Gold Fields Limited (GFI) -0.18%

Gold Fields reported a significant uplift in FY2025 financial performance, with profit attributable to shareholders rising to US$3.57 billion (US$3.99 per share) from US$1.25 billion in FY2024, supported by stronger production and higher realised gold prices. Adjusted free cash flow increased materially to US$2.97 billion, enabling total shareholder distributions of US$1.7 billion, equivalent to 54% of free cash flow. The group declared a final dividend of 1,850 SA cents per share and a special dividend of 450 cents, alongside US$100 million in buybacks, while maintaining a low net debt-to-EBITDA ratio of 0.26x.

Kumba Iron Ore Limited (KIO) -4.41%

Kumba Iron Ore delivered a resilient FY2025 performance, with revenue rising 2% to R70.1 billion and adjusted EBITDA of R31.9 billion, reflecting a strong 46% margin supported by disciplined cost control and a 12% premium to benchmark realised prices. Headline earnings per share increased 18%, although attributable free cash flow declined 17% to R12.0 billion. The group maintained a robust net cash position of R14.9 billion and a ROCE of 46%. A total dividend of R32.03 per share was declared, equating to a 70% payout ratio, underscoring continued capital allocation discipline.

Mondi plc (MNP) +2.67%

Mondi delivered a resilient FY2025 performance amid ongoing cyclical weakness in packaging and paper markets, with revenue rising 3% to €7.66 billion, although underlying EBITDA declined 5% to €1.00 billion, reflecting margin pressure and softer pricing. Underlying EPS fell 32% as profitability moderated, while ROCE declined to 6.7%. Despite this, cash generation remained strong, supporting disciplined capital allocation and a reduced total dividend of 28.25 euro cents per share. Management continues to prioritise cost optimisation, operational efficiency and footprint rationalisation, positioning the group to capture upside as market conditions improve.

Blu Label Unlimited Group Limited (BLU) -3.13%

Blu Label expects a significant decline in interim earnings for the six months to November 2025, with EPS forecast to shift to a loss of approximately 555 cents per share, largely due to a R5.2 billion loss linked to its Cell C transaction. Headline earnings remain more resilient, declining 14–18%, while core headline earnings are expected to fall 10–14%, reflecting underlying operational stability. Following the listing and partial disposal of Cell C, Blu Label now equity accounts its remaining 49.47% stake, marking a strategic transition, with core metrics indicating a stable earnings base despite substantial once-off restructuring impacts.

City Lodge Hotels Limited (CLH) -1.04%

City Lodge Hotels reported a solid interim performance for the six months to December 2025, with revenue increasing 12% to R1.14 billion, supported by improved occupancy of 61.6%. Operational momentum drove a 16% rise in adjusted EBITDAR to R371 million, with margin expansion to 32.5%. While reported EPS and HEPS were marginally lower at 21.5 cents, adjusted HEPS increased 33%, reflecting underlying earnings strength. Cash generation remained robust, rising 39% to R347 million, enabling a 33% increase in the interim dividend to 8 cents per share.

Walmart Inc. (WMT) -1.38%

Walmart reported a solid quarterly performance, with revenue rising 5.6% to $190.7 billion and US comparable sales increasing 4.6%, supported by continued strength in e-commerce, where sales grew 27%—marking a 15th consecutive quarter of double-digit expansion. Growth is increasingly driven by higher-income consumers and rapid delivery adoption. Despite the beat, shares declined as management issued a cautious outlook, guiding FY2027 EPS to $2.75–$2.85, below expectations, and sales growth of 3.5–4.5%. A new $30 billion buyback underscores capital return, while signalling a more conservative demand backdrop.

Deere & Company (DE) +11.58%

Deere reported a stronger-than-expected first quarter, with revenue rising 13% to $9.61 billion and EPS of $2.42 beating estimates, despite net income declining year on year to $656 million amid ongoing demand softness. Management raised FY2026 net income guidance to $4.5–$5.0 billion, above prior forecasts and consensus, citing cost discipline and improving demand in construction and small agriculture. Segment sales are now expected to grow c.15%, signalling cyclical stabilisation. However, a $1.2 billion tariff headwind remains a key risk, even as management positions 2026 as a potential trough in the cycle.

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