Delta Air Lines Lawsuit Against CrowdStrike Proceeds Over $500M Outage

Local Market Commentary

The Top 40 index dipped 0.12% to 85,000.3 points, with the All Share index down 0.14% at 92,492.1. In a bid to stabilise strained US-South Africa relations, President Ramaphosa is set to meet President Trump in Washington on Wednesday, with plans to explore business opportunities for Elon Musk’s companies, including a potential tariff deal for Tesla in exchange for EV infrastructure investment. The visit follows heightened political tension, including US funding cuts and controversial asylum grants, as South Africa seeks to present a broader trade reset proposal.

European Market Commentary

European equities ended flat on Monday, with the STOXX 600 inching up 0.1% as positive corporate results offset pressure from a surprise U.S. credit rating downgrade, keeping the index near its recent seven-week high. In geopolitical developments, the UK and EU struck a landmark post-Brexit agreement covering defence, trade, and fisheries, signalling improved ties. Meanwhile, Romanian markets rallied after centrist Nicusor Dan secured a surprise presidential win over a eurosceptic rival, though he now faces the formidable challenge of enacting fiscal consolidation to address the region’s largest budget deficit.

U.S. Market Commentary

U.S. equities closed largely unchanged on Monday as investor sentiment was dampened by Moody’s downgrade of the federal government's credit rating to “Aa1” from “Aaa”, citing a $36 trillion debt burden. Federal Reserve officials responded cautiously to the downgrade and heightened market volatility, reflecting broader economic uncertainty. In legal developments, a U.S. judge rejected Vanguard’s proposed $40 million settlement with investors over tax liabilities in its target-date funds, criticising the deal for offering "no value" due to potential offsets from a prior SEC settlement.

Asia Market Commentary

Asia-Pacific markets advanced on Tuesday after the People’s Bank of China cut its 1-year and 5-year loan prime rates by 10 basis points to 3.0% and 3.5% respectively, marking the first rate reduction since October as Beijing intensifies support for its slowing economy amid persistent trade tensions. In response to improving sentiment following a U.S.-China trade truce, Bank of Singapore revised its 12-month forecast for the onshore yuan from 7.4 to 7.1 against the dollar.

Currency Market Commentary

The South African rand slipped on Monday ahead of the national budget speech and President Ramaphosa’s upcoming meeting with President Trump in Washington. Meanwhile, the Russian rouble, which has appreciated around 40% against the dollar this year to near 80, faces risks of a sharp correction to 100 amid stalled Ukraine peace talks, potential rate cuts, and oil price declines, raising concerns over market stability. The U.S. dollar traded sideways on Tuesday, pressured by Fed caution and congressional moves toward legislation expected to widen the fiscal deficit, following Moody’s recent downgrade of the U.S. sovereign rating; focus now shifts to a pivotal vote on Trump’s proposed tax reforms.

Commodity Market Commentary

Gold prices softened on Tuesday as a firmer dollar and optimism over a potential Russia-Ukraine ceasefire reduced demand for safe havens. Oil prices remained largely steady amid mixed factors: concerns over a U.S.-Iran nuclear deal collapse, robust physical demand in Asia, and a cautious outlook for China’s economy. Saudi Arabia plans to increase crude oil consumption for power generation this summer to offset rising fuel oil costs, potentially alleviating global supply concerns following OPEC+’s agreement to raise production by nearly 1 million barrels per day over the next quarter.

Astral Foods Limited (ARL) +2.29%

Astral Foods released unaudited interim results for the six months to 31 March 2025, with revenue up 3.5%. However, operating profit plunged 51%, while earnings per share fell 49% and headline earnings dropped 54%, highlighting sustained margin compression. An interim dividend of 220 cents per share was declared.

Vodacom Group Limited (VOD) +0.61%

Vodacom reported reviewed results for the year to 31 March 2025, with revenue up 1.1% to R152.2 billion, constrained by currency pressures, but normalised growth reached 10.9%. Group service revenue was flat on a reported basis but up 11.2%* normalised, outperforming medium-term targets. Financial services revenue grew 7.6% to R14.0 billion (11.6% of service revenue). Group EBITDA declined 1.1% to R55.5 billion but rose 7.8%* normalised. HEPS came in at 857cps, and the dividend increased by 5.1% to 620cps. The customer base expanded to 211.3 million, including 87.7 million financial services users.

Famous Brands Limited (FBR) +1.03%

Famous Brands delivered strong results against a tough South African backdrop, marked by constrained consumer spend and service disruptions. Revenue grew 3.2% to R8.3 billion, with operating profit rising 12.6% to R914 million at an 11% margin. HEPS improved 11.9% to 520 cents, while gearing was reduced to 0.77x. The dividend increased by 14.2% to 195 cents, reflecting balance sheet strength and confidence. Franchised brands continue to outperform independents, supported by scale, brand strength, and consumer trade-down behaviour.

WeBuyCars Limited (WBC) -0.73%

WeBuyCars posted a strong performance for the six months to 31 March 2025, with revenue up 15.2% to R13.1 billion and core headline earnings up 26.4% to R508.2 million, driven by record unit sales, margin expansion, and tech efficiencies. Over 91,000 vehicles were sold, including a monthly record of 16,294 in November 2024. Core HEPS rose 1.6%, diluted by the pre-listing share issue. A 30 cents per share interim dividend was declared (25% payout ratio). The Group remains highly cash generative with a strong balance sheet, underpinning further local expansion.

Delta Air Lines Inc. (DAL) +0.53%

Delta Air Lines can proceed with most of its lawsuit against cybersecurity firm CrowdStrike after a Georgia state judge ruled that Delta may prove gross negligence related to a defective July 2024 Falcon software update that caused a massive global computer outage and forced the cancellation of 7,000 flights. The ruling allows Delta to pursue claims of computer trespass and alleged fraudulent promises by CrowdStrike regarding unauthorized back doors. CrowdStrike’s legal team remains confident the case lacks merit or that damages will be limited, while Delta estimates the outage resulted in $500 million net losses. Separately, a federal court approved a class action by passengers denied full refunds following the disruption affecting 1.4 million travellers.

Ryanair Holdings PLC (RYA) +4.77%

Ryanair reported robust demand across its 37-country European network and forecast a strong rebound in fares, expected to rise by mid-to-high teens percentage year-on-year in Q2, supported by seasonal factors like Easter. Despite a 16% profit decline to €1.61 billion for the year ended March 31, due to softer demand and fare pressure from a dispute with online travel agents, the airline exceeded earlier fare increase forecasts with a near 7% rise. Summer bookings are marginally ahead of last year, while Ryanair anticipates modest unit cost inflation, mitigated by new aircraft, fuel hedging, and cost controls amid rising air traffic charges and environmental levies. CEO Michael O’Leary is positioned for a significant bonus tied to the share price performance.

Boeing Company (BA) -0.28%

Families of victims from the two fatal Boeing 737 MAX crashes, which claimed 346 lives, intend to oppose a proposed nonprosecution agreement between Boeing and the U.S. Justice Department that would postpone a June 23 fraud trial. The families argue the deal undermines accountability for what a judge described as the "deadliest corporate crime in U.S. history" and criticise Boeing’s retreat from a previously planned guilty plea, signalling a setback in corporate responsibility efforts. Boeing has declined to comment on the matter.

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