Alibaba misses as profit drops sharply despite cloud strength

South African Market Summary

South African equities weakened, with the JSE All Share index declining 2.76% to 110,572.12 and the Top 40 falling 2.97% to 102,746.15, reflecting broader risk-off sentiment. Exxaro indicated coal export volumes could rise by up to 12% in 2026, supported by improved rail logistics and elevated prices amid Middle East tensions. Glencore flagged potential withdrawal from ferrochrome tariff negotiations, highlighting ongoing cost pressures. Structural concerns persist, with Gauteng’s economic stagnation and inequality in focus, while regulators warned that declining JSE listings could undermine market depth and long-term growth.

European Market Summary

European equities declined sharply, with the STOXX 600 falling 2.4% to 583.73, its lowest level since December, as the ECB warned that prolonged Middle East conflict could exacerbate inflation via higher energy prices and supply disruptions. Central banks maintained a cautious stance, with both the Bank of England and U.S. Federal Reserve holding rates steady while signalling inflation risks remain elevated. Geopolitical uncertainty remains central, with the EU pushing ahead with a €90 billion Ukraine support package despite internal resistance, alongside proposed electricity tax cuts and subsidies to mitigate rising energy costs.

US Market Summary

U.S. equities closed lower as inflation concerns linked to rising oil prices weighed on rate cut expectations, following the Federal Reserve’s decision to hold rates steady amid heightened geopolitical uncertainty. Micron declined 3.8% after underwhelming guidance despite strong AI-driven demand, while Nvidia eased 1%. Tesla fell 3.2% as regulators intensified scrutiny of its Full Self-Driving system. Macro data remained supportive, with weekly jobless claims declining, signalling labour market resilience. Trading volumes were broadly in line with recent averages, indicating steady but cautious investor participation.

Asian Market Summary

Asia-Pacific markets traded mixed as investors remained cautious amid ongoing Middle East tensions and energy supply risks, following volatile U.S. trading. In China, five firms launched Hong Kong listings targeting up to HK$5.3 billion, despite tighter regulatory scrutiny on offshore-incorporated companies seeking IPOs. Policymakers are expected to keep benchmark lending rates unchanged for a tenth consecutive month, as rising oil prices complicate the inflation outlook. With economic activity showing resilience and growth targeted at 4.5%–5% for 2026, authorities appear less inclined to introduce near-term stimulus measures.

Currency Market Summary

The South African rand traded broadly stable as markets digested the Federal Reserve’s hawkish stance, which has pushed back expectations for near-term rate cuts amid heightened geopolitical risk. Despite elevated energy prices, the U.S. dollar eased from multi-month highs, with global currencies including the euro, yen and sterling gaining ground as central banks signalled a higher-for-longer rate environment. Prior expectations of two U.S. rate cuts in 2026 have largely dissipated, reflecting inflation risks linked to Middle East tensions and tighter global financial conditions.

Commodity Market Summary

Oil prices eased as coordinated global efforts to secure shipping routes through the Strait of Hormuz and potential U.S. supply measures helped alleviate immediate supply concerns. The U.S. signalled possible sanction relief on Iranian oil and further releases from the Strategic Petroleum Reserve, while major economies pledged support to safeguard energy transit routes. Despite geopolitical tensions, policy intervention tempered price pressures. Meanwhile, gold declined more than 4%, extending its losing streak, as elevated inflation expectations reinforced the likelihood of higher-for-longer interest rates across major central banks, reducing the appeal of non-yielding assets.

Exxaro Resources Limited (EXX) +1.17%

Exxaro reported a resilient FY2025 performance, with revenue rising 3% to R41.8 billion, supported by its diversified exposure across coal, energy and metals. Net operating profit declined 7% to R7.1 billion, while attributable earnings per share eased marginally to 3,178 cents. Headline earnings per share increased 8% to 3,247 cents, reflecting underlying operational strength. The group declared a final dividend of 1,000 cents per share, up 15%, signalling continued capital return discipline. The results were reviewed with an unmodified conclusion, reinforcing balance sheet stability despite a modest earnings contraction.

Momentum Group Limited (MTM) -0.42%

Momentum Group delivered a solid 1H2026 performance, with headline earnings increasing 8% to R3.56 billion and normalised headline earnings rising 8% to R3.70 billion, supported by a 10% increase in operating profit. Earnings per share grew 6%, while headline EPS advanced 13%, reflecting improved operational efficiency. The group declared an interim dividend of 110 cents per share, up 29%, underscoring strong capital generation. Contractual service margin expanded 5% to R21.2 billion, although new business metrics softened, with VNB declining 15% and margins compressing, indicating near-term pressure on growth quality.

Alibaba Group Holdings Limited (9988) -4.14%

Alibaba reported subdued third-quarter results, with revenue rising 1.7% to 284.8 billion yuan but net income declining 66.3%, both missing expectations as elevated spending on rapid delivery and promotions weighed on profitability. U.S.-listed shares fell over 6% following weaker-than-expected adjusted earnings. Cloud revenue remained a bright spot, increasing 36% on continued AI integration and investment. Strategic focus is shifting towards AI monetisation, including plans to separate AI operations from the cloud unit. Management reaffirmed long-term targets, including 1 trillion yuan in GMV and profitability by fiscal 2029.

Accenture Plc. (ACN) +4.30%

Accenture delivered a strong quarterly performance, with revenue rising 8.3% to $18.04 billion, ahead of expectations, driven by robust demand for AI and cloud transformation services. Earnings per share increased to $2.93, reflecting solid execution and client spending on digital automation. Bookings reached $22.1 billion, underscoring sustained demand momentum. The group plans approximately $5 billion in AI-focused acquisitions to support growth. While management raised the lower end of its annual revenue guidance, the outlook remains below consensus, with geopolitical uncertainty and reduced U.S. federal spending expected to weigh modestly on near-term growth.

FedEx Corporation (FDX) +1.82%

FedEx signalled resilient global demand despite escalating Middle East tensions, with fuel surcharges helping offset elevated oil prices and protect margins. Strong holiday quarter performance supported an upgrade to full-year guidance, with adjusted EPS now expected at $19.30–$20.10, ahead of prior forecasts and consensus. Quarterly earnings of $5.25 per share materially exceeded expectations, despite costs linked to MD-11 fleet replacements. Operational momentum in the Express segment, driven by improved pricing, higher volumes and cost discipline, reinforced earnings strength, although sustained geopolitical disruption and fuel volatility remain key risks to near-term performance.

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