GM profits hit by tariffs but beats expectations, reaffirms outlook and ramps up US investment

South Africa

The All Share index lost 0.33% yesterday, dropping to 99,324.5 points, while the Top 40 index traded 0.44% lower, reaching 91,590.3 points. South African data revealed a subdued economic environment, with the manufacturing Purchasing Managers' Index (PMI) remaining in contraction, and formal business turnover and infrastructure investment continuing to lag. Despite these headwinds, the recent rally in platinum prices is expected to bolster government revenues ahead of the mid-term budget, providing some fiscal relief. Political developments also offered short-term stability: President Ramaphosa dismissed a cabinet minister implicated in corruption, enabling the passage of a crucial appropriations bill and averting a budget crisis. Meanwhile, FlySafair was disrupted by a pilots' strike affecting scheduled flights, highlighting tension in the transport sector.

Europe

European markets saw a modest retreat amid mixed corporate results and anxiety over rising trade tensions with the US. The STOXX 600 index declined, led by weakness in chemicals stocks following profit warnings. However, selective optimism emerged, including Compass Group’s planned acquisition. Policymakers are preparing countermeasures under the Digital Markets Act, while the EU has raised the ETIAS travel authorisation fee to enhance security and parity. Leaders are also preparing for a terse EU–China summit, given unresolved disputes over trade and rare‑earth exports, reflecting growing geopolitical complexity.

US

US markets remained steady as the S&P 500 and Nasdaq hovered near record levels, despite simmering concerns over tariff policy and public debt. First‑quarter growth held at a moderate pace, supported by solid corporate earnings, while yields and bond markets remained stable. Investors awaited further clarity on trade negotiations. Meanwhile, AstraZeneca announced a sizeable investment in US drug manufacturing, reflecting ongoing shifts in pharmaceutical production strategies. A slowdown in US tariff pause and fresh external uncertainties prompted cautious optimism.

Asia

In Asia, China recorded its first annual rise in consumer prices since January, driven by consumer demand and policy support, indicating a gradual recovery. Japanese political continuity following recent elections introduced uncertainty for central bank policy as inflation and spending pressures persist. Broader Asian markets remained cautious amid evolving global supply‑chain adjustments and ongoing Sino‑US trade frictions. Corporate news was relatively muted, though investors tracked sentiment closely ahead of upcoming regional earnings.

Currencies

Currency markets showed notable moves: the euro’s rally in the second quarter presented headwinds for export‑oriented sectors, while the yen strengthened following Japan’s recent political continuity. The rand displayed resilience, trading firmly ahead of the SARB’s anticipated rate decision. Meanwhile, US dollar dynamics were impacted by global policy uncertainty, with markets closely monitoring interest‑rate outlooks and trade‑related developments.  

Commodities

Commodity markets reflected both opportunity and restraint. Gold and platinum rallies underscored safe‑haven demand and bolstered fiscal receipts in primary producing nations. Oil dipped slightly following profit‑led equity tone, though remains influenced by US tariff dynamics. The commodity mix continues to benefit emerging markets while also feeding into inflationary considerations and policy debates in developed economies.

Sasol Limited (SOL) -6.05%

Sasol released a trading and operational update on 22 July 2025, outlining continued progress on its strategic priorities despite a challenging macroeconomic and geopolitical environment. The company expects to meet most of its FY25 financial guidance, with production volumes marginally below expectations due to unplanned disruptions at Secunda Operations and Natref. A strategic shift to supplement in-house coal production with higher-quality purchased coal improved gasifier performance, while Natref’s recovery from a prior fire incident was impacted by an Eskom power outage. Liquid fuels sales and external gas demand improved in Q4, and Chemicals Africa reported a stronger average basket price. Internationally, revenue rose quarter-on-quarter on higher US production volumes, though year-on-year revenue declined due to softer sales volumes and pricing pressures. Sasol reported improved adjusted EBITDA, supported by stronger pricing and proactive cost control. Key milestones include the on-schedule coal destoning project, a R4.3 billion legal settlement with Transnet, successful go-live of the SAP S/4HANA ERP pilot in Italy, and ongoing asset rationalisation in the US and Europe. Renewable energy efforts advanced with 160MW of additional PPAs in South Africa and a 93MW virtual PPA in the US, aimed at decarbonising operations. Natref also commissioned a new low-carbon boiler and commenced renewable diesel production. Sasol maintains strong liquidity, rigorous cost discipline, and an active hedging programme, while managing potential impacts from the reintroduction of US tariffs in August. Further guidance will be provided with FY25 results on 25 August 2025.

Reinet Investments S.C.A. (RNI) -2.43%

Reinet Investments S.C.A. released its management statement for the first quarter ended 30 June 2025, reporting a net asset value (NAV) of EUR 6.6 billion, reflecting a compound annual growth rate of 8.6% in euro terms since March 2009, inclusive of dividends paid. The NAV declined by EUR 316 million (4.6%) from EUR 6.915 billion at 31 March 2025, with the NAV per share decreasing from EUR 38.04 to EUR 36.30 over the period. During the quarter, Reinet committed EUR 293 million to new and existing investments, with EUR 21 million funded. The company also received ordinary and special dividends totalling GBP 178 million (EUR 212 million) from Pension Insurance Corporation Group Limited. Notably, Reinet entered into an agreement to divest its entire stake in Pension Insurance Corporation Group Limited to Athora Holding Ltd, with the transaction expected to conclude in early 2026.

General Motors Company (GM) -8.12%

General Motors reported its second-quarter 2025 results, revealing a 35 per cent decline in net income to $1.9 billion, primarily driven by a $1.1 billion hit from new US tariffs imposed on imported vehicles and parts. Despite this setback, the company exceeded revenue and adjusted operating income expectations, with strong overall sales including a 7.3 per cent increase in US volume underpinning performance. Wholesale shipments to dealers fell 7 per cent, while the company reaffirmed its full‑year profit guidance. To mitigate tariff pressures, GM is accelerating localisation efforts—relocating production such as the Chevrolet Blazer from Mexico to Tennessee—and plans to invest $4 billion in US facilities, targeting an additional 300,000 domestic units by 2027. Electric vehicle sales continued to surge, and GM confirmed its capital expenditure blueprint includes converting an EV plant in New York to produce V‑8 engines. 

Coca‑Cola Company (KO) -0.59%

The Coca‑Cola Company (NYSE: KO) announced its Q2 2025 results, reporting comparable revenue growth of 2.5 per cent to $12.62 billion, surpassing expectations, and adjusted EPS of $0.87—approximately 4 per cent ahead of consensus. Gross and operating margins widened significantly, with operating margin rising from 21.3 per cent in Q2 2024 to 34.1 per cent, driven by effective price realisation, cost containment and portfolio optimisation, offsetting adverse currency movements. Net income soared 58 per cent to $3.8 billion, even as case volumes declined 1 per cent globally, reflecting pricing power and product mix, notably strength in Coca‑Cola Zero and protein milkshakes. The company confirmed its FY guidance, projecting organic growth of 5–6 per cent, comparable EPS growth of 7–9 per cent, and adjusted EPS of approximately $2.97. A new cane-sugar-sweetened cola will be rolled out in the US later this year.  

ASM International N.V. (ASM) -3.60%

ASM International reported Q2 2025 financial results, delivering a robust performance with gross margins at 51.8 per cent—down modestly from 53.4 but still ahead of targets—driven by favourable customer and product mix, efficiency enhancements, and stronger-than-anticipated China sales. Adjusted operating profit rose approximately 40 per cent year‑on‑year, bolstered by increased sales, improved margin dynamics, and disciplined cost control, even while R&D investments remained steady. The company affirmed its full-year gross margin guidance in the upper half of its 46–50 per cent range. For H2, revenue is expected to remain flat at constant exchange rates versus H1, with Q3‑on‑Q2 projected to decline 0–5 per cent due to variability in logic/foundry node and region-specific bookings. Longer‑term demand from the ramp-up of 2 nm GAA logic nodes and continued traction in DRAM/ HBM applications supports its expectation to outperform the wafer fabrication equipment market. Geopolitical uncertainty and potential tariff impacts remain key variables. 

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