In today's Taking Stock, Home Depot reported better-than-expected Q1 sales of $39.86bn (vs. $39.31bn est.) but missed on EPS at $3.56 (vs. $3.60 est.), with operating margin contracting to 12.9% from 13.9% y/y.
Local Market Commentary
The Top 40 index gained 0.33% to close at 85,281.3 points, with the All Share index rising 0.29% to 92,763.2 points. Ahead of Wednesday’s meeting between U.S. President Donald Trump and South African President Cyril Ramaphosa, Trump is expected to seek exemptions for U.S. firms from South Africa’s equity ownership laws for disadvantaged groups, underscoring tensions in bilateral relations. South Africa is preparing a trade proposal aimed at resetting ties, including a potential workaround for Elon Musk’s Starlink to operate despite local ownership rules. Meanwhile, Finance Minister Enoch Godongwana faces a critical third attempt to pass the budget amid coalition resistance over planned tax increases.
European Market Commentary
European stocks closed near nine-week highs on Tuesday, with utilities and telecom sectors leading gains, supported by positive corporate earnings. The pan-European STOXX 600 index rose 0.7% to an eight-week high, while Germany and Ireland hit record highs, and Spain traded at levels not seen since 2008. The EU and UK imposed new sanctions on Russia ahead of the U.S., clouding prospects for Russia-Ukraine peace talks. Meanwhile, euro zone consumer confidence improved more than expected in May, rising 1.4 points to -15.2, with overall EU sentiment also up by 1.4 points to -14.5.
U.S. Market Commentary
U.S. stocks declined on Tuesday, with the S&P 500 snapping a six-session winning streak amid rising Treasury yields and renewed focus on the country’s sovereign debt outlook. President Donald Trump’s push for a substantial tax-cut bill, potentially adding $3 trillion to $5 trillion to the $36.2 trillion federal debt, heightened investor concerns. Market participants also monitored comments from Federal Reserve officials, including St. Louis Fed President Alberto Musalem, as Moody’s, Fitch, and S&P Global Ratings all downgraded U.S. creditworthiness due to debt levels. Traders now price in at least two 25-basis-point rate cuts by end-2025, with the first anticipated in September.
Asia Market Commentary
Asia-Pacific markets traded mostly higher on Wednesday following Wall Street’s six-day winning streak ending. Japanese exports grew 2% year-on-year in April, matching forecasts but marking the slowest pace since October 2024 amid ongoing U.S. tariffs. Imports declined 2.2%, less than expected. Preliminary data showed Japan’s real GDP contracted an annualized 0.7% in Q1 2025, weighed down by weak private consumption and slowing export growth. Meanwhile, China’s youth unemployment rate for 16-to-24-year-olds eased to 15.8% in April from 16.5% in March, signalling modest labour market improvement.
Currency Market Commentary
South Africa’s rand strengthened against a softer dollar on Tuesday ahead of the national budget speech and a high-profile meeting between President Cyril Ramaphosa and U.S. President Donald Trump. Meanwhile, the British pound remained steady near a three-week peak following a significant UK-EU trade and defence agreement. The U.S. dollar continued a two-day decline on Wednesday, pressured by Trump’s inability to secure Republican support for his proposed sweeping tax reform.
Commodity Market Commentary
Gold prices climbed to a one-week high on Wednesday as a weaker dollar and U.S. fiscal uncertainty amid tax bill debates boosted safe-haven demand. Meanwhile, oil prices surged over 1% following reports that Israel is preparing a strike on Iranian nuclear sites, stoking fears of supply disruptions in the Middle East. Iran, OPEC’s third-largest producer, could retaliate by blocking tanker traffic through the Strait of Hormuz, a critical export route for several Gulf states. Offsetting some concerns, Kazakhstan’s oil production rose 2% in May, defying OPEC+ calls for output cuts.
Alexforbes Group Holdings Limited (AFH) +2.08%
Alexforbes will release its full-year results to 31 March 2025 on or about 9 June, with earnings expected to show strong growth. Basic EPS is projected to increase by 25–35% and headline EPS by 10–20%, supported by robust operations, favourable markets, strong client retention, and recent acquisitions. A R152 million legal award from discontinued operations relating to the historical UK ETV liability adds a 35–45% boost to basic EPS. Operating profit before non-trading and capital items is expected to rise by 12–16%, with cost growth affected by IFRS 16, acquisition integration, and two-pot reform implementation. Results align with expectations and reflect disciplined strategy execution.
Stefanutti Stocks Holdings Limited (SSK) +12.42%
Stefanutti Stocks anticipates a significant turnaround in its results for the year ended 28 February 2025. EPS from total operations is expected to rise by 715–735% and headline EPS by 285–305%, driven by continued operations. Headline EPS is projected at 124.48–125.58 cents, reversing a prior-year loss. The group recognised R148 million in litigation proceeds from the Kalabo project, with R109 million impaired due to credit risk. Restructuring efforts remain on track, including the disposal of operations in Mozambique and elsewhere. Results will be released on 27 May, reflecting improved execution and resolution of legacy matters.
Nutun Limited (NTU) -12.00%
Nutun, formerly Transaction Capital, reported interim results for the half-year to 31 March 2025, showing early stabilisation after restructuring into two core divisions: Nutun International (BPO in UK, US, and Australia) and Nutun South Africa (collections and NPL acquisitions). Group revenue declined 4% to R1.48bn, but the core loss narrowed to R71 million from R104 million, aided by cost controls, a 33% cut in net interest expense, and operational efficiencies. Nutun International maintained revenue and expanded its client base, while Nutun South Africa saw a 9% revenue drop due to weaker collections and cautious NPL deployment. Discontinued losses reduced from R1.45bn to nil, cleaning up the income statement. Bank funding lines secured to 2027 support growth plans in NPL and BPO operations.
Home Depot Inc. (HD) -0.61%
Home Depot reported better-than-expected Q1 sales of $39.86bn (vs. $39.31bn est.) but missed on EPS at $3.56 (vs. $3.60 est.), with operating margin contracting to 12.9% from 13.9% y/y. Comparable sales declined 0.3%, slightly worse than the expected 0.15% drop, primarily due to weather-related weakness in February. Despite upcoming U.S. tariffs, the company plans to maintain pricing, which may lead to reduced product availability. Management noted a reduced reliance on China, with no single non-U.S. country expected to account for more than 10% of sourcing within a year. Fiscal 2025 guidance was maintained, projecting 2.8% sales growth and a 2% EPS decline. Shares closed down 0.5%.
Rio Tinto Limited (RIO) -0.20%
Argentina has approved Rio Tinto’s $2.5bn Rincon lithium project—the first under the new RIGI investment incentive regime—aiming to revitalise its mining sector amid economic instability and soaring inflation. The project, located in Salta province, signals progress after months of delays affecting seven other proposals. As the world’s fourth-largest lithium supplier and part of the resource-rich “lithium triangle” with Chile and Bolivia, Argentina is targeting increased foreign investment to secure hard currency and develop its broader mining potential, which includes untapped copper, gold, and silver reserves.
Alphabet's Inc. (GOOGL) -1.54%
At its I/O conference, Alphabet's Google unveiled an aggressive push to integrate AI deeper into its ecosystem, introducing advanced search capabilities, smart glasses, and a $249.99/month AI premium subscription aimed at power users. The company showcased its ambition to reclaim leadership in generative AI by offering personalised, proactive services—from real-time image analysis to automated task handling—amid intensifying competition from OpenAI and Microsoft. CEO Sundar Pichai emphasised delivering cutting-edge models at accessible price points, signalling a strategy focused on broad adoption while monetising advanced functionality.
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