FedEx Flags Soft Outlook Despite Solid Q4, Plans Trucking Spinoff

Local Market Commentary

The JSE’s Top 40 and All Share indices each posted modest gains of around 0.8% on Tuesday, closing at 88,357.2 and 95,887.0 points respectively, despite weak local data showing a 0.3% monthly decline in the SARB’s leading business cycle indicator and a 0.7% contraction in formal employment for Q1. Labour tensions are mounting in the automotive sector, with NUMSA demanding a 10% wage increase from major manufacturers. Broader risks to the sector include trade uncertainty, a shift toward EVs in export markets, and competitive pressures from low-cost imports—all of which cloud South Africa’s manufacturing outlook. Investor sentiment remains fragile amid macro headwinds and persistent structural constraints facing domestic industries.

European Market Commentary

European equities rallied, with the STOXX 600 climbing 1.11% amid optimism over a ceasefire in the Middle East, though energy stocks lagged due to falling oil prices. UK data signalled further labour market softening, with real wages under pressure and vacancies—especially for graduates—continuing to decline. Germany, meanwhile, is set to issue €19 billion in additional Q3 debt to support higher infrastructure and defence spending, aligning with recent fiscal reforms that allow greater borrowing flexibility. Investors remain cautiously optimistic, balancing geopolitical relief with growing evidence of economic stagnation in key EU economies and labour market imbalances.

U.S. Market Commentary

U.S. markets extended gains on Tuesday, bolstered by hopes of de-escalation in the Middle East and measured comments from Fed Chair Powell, who reiterated that the central bank remains patient on rate cuts amid ongoing tariff uncertainty. Traders are increasingly pricing in a potential rate cut by September, though economic sentiment took a hit as consumer confidence slid to its lowest level in over three years. Key economic updates this week include final Q1 GDP and Friday’s PCE report, which will provide further clarity on inflation and consumer trends. Equity strength reflects cautious optimism amid complex macroeconomic crosswinds and monetary policy uncertainty.

Asia Market Commentary

Asian markets were mixed as investors responded to geopolitical developments and fresh central bank commentary. In Australia, May inflation eased more than expected to 2.1%, driven by softer food, housing, and transport costs. In Japan, policymakers voiced diverging views at the June BoJ meeting, with some advocating for rate stability in light of U.S. tariffs, while others urged preparedness for future tightening as inflation remains elevated. The BoJ kept its policy rate at 0.5% and signalled a cautious path forward in scaling back stimulus. Regional sentiment remains finely balanced between improving inflation dynamics and lingering external demand risks.

Currency Market Commentary

The rand strengthened on Tuesday, snapping a losing streak as the ceasefire between Israel and Iran boosted demand for emerging market assets. The U.S. dollar retreated slightly, with global equities surging to record highs amid easing geopolitical tensions. Despite Powell’s cautious congressional remarks, investors are still assigning an 18% probability to a July Fed rate cut, reflecting ongoing speculation about the U.S. policy outlook. Risk appetite continues to be driven by geopolitical headlines and central bank guidance, underscoring the sensitivity of currency markets to global uncertainty and sentiment shifts.

Commodity Market Commentary

Gold prices edged higher as the U.S. dollar and Treasury yields softened, while market attention remained fixed on the fragile ceasefire between Israel and Iran. Oil rebounded modestly on Wednesday but held near multi-week lows, with market participants weighing ceasefire stability against supply data. Preliminary figures from the API showed a 4.23 million barrel decline in U.S. crude stockpiles, ahead of official government inventory data. Commodity markets remain tightly linked to geopolitical developments and policy outlooks, with volatility heightened by conflicting signals from demand indicators and shifting inventory dynamics.

Grindrod Limited (GND) -1.95%

Grindrod experienced a mixed first half to 2025, with a slow start offset by a strong recovery from March, particularly in its Terminals segment. Weaker mining commodity markets—especially iron ore, lithium, and coal—impacted volumes early on, but the Matola terminal achieved record monthly throughput of 1.1 mtpa in May. Ports and Terminals maintained a solid EBITDA margin of 35%, while Logistics margins declined to 25%. Strategic highlights include full ownership of the Matola terminal through a R1.4 billion equity buyout and R0.9 billion raised via non-core asset disposals. Despite an increase in gross debt to R3.7 billion, net debt remained flat at R0.4 billion, reflecting disciplined capital management.

Cilo Cybin Holdings Limited (CCC) 0.00%

Cilo Cybin expects a basic and headline loss per share of between 0.8 and 0.9 cents for FY25, down from 0.51 cents earnings in FY24, representing a decline of more than 100%. The anticipated loss is attributed to once-off acquisition costs tied to the R845 million share-based purchase of Cilo Cybin Pharmaceutical. Advisory, legal, and valuation expenses weighed on profitability, despite the strategic nature of the transaction aimed at expanding the Group’s pharmaceutical footprint.

Sephaku Holdings Limited (SEP) +5.71%

Sephaku Holdings expects an increase in basic earnings per share of 16%–24% and headline earnings per share of 17%–24% for FY25. The performance reflects robust contributions from Métier, which delivered strong top-line and profit growth, and Sephaku Cement, which managed to match prior-year results despite persistent economic and industry-specific challenges. The update underscores the Group’s operational discipline and market resilience.

Capital Appreciation Limited (CTA) 8.43%

Capital Appreciation posted strong full-year results to 31 March 2025, led by its Payments division, where terminal sales rose 41.1% and transaction income grew 18.6%. Customer-deployed terminals increased to 424,000, up 18.8% year-on-year. While the Software division improved in H2, it remained below expectations. With R402 million in cash and encouraging deal pipelines in both divisions, the Group remains well positioned, though conversion timelines remain prolonged.

AYO Technology Solutions Limited (AYO) +13.89%

AYO has withdrawn its cautionary announcement after disclosing a firm intention to acquire all shares not held by the offeror or its concert parties, potentially leading to the Company’s delisting. The proposed transaction, first announced on 23 May and updated on 18 June, will be detailed in a forthcoming shareholder circular. Trading in AYO shares may now proceed without the need for caution.

FedEx Corporation (FDX) +0.12%

FedEx signalled caution for the year ahead, forecasting first-quarter adjusted earnings of $3.40 to $4.00 per share, below analyst estimates of $4.06, reflecting volatile global demand and trade policy uncertainty, especially regarding China. Despite posting stronger-than-expected Q4 results with operating margin gains driven by cost reductions and export volume growth, FedEx refrained from issuing full-year guidance. The company’s exposure to China trade issues, including fluctuating tariffs, contrasts with rival UPS’s more modest share price impact. FedEx also announced plans to spin off its trucking unit by June 2026.

BlackBerry Limited (BB) +0.23%

BlackBerry increased its FY2026 revenue forecast, anticipating growth driven by robust demand for cybersecurity services amid rising cybercrime globally. The company now expects total revenue between $508 million and $538 million, up from prior guidance. Its secure communications segment, supplying intelligent security solutions to enterprises and governments, also saw an upward revision, forecasted at $234 million to $244 million. Despite Q1 revenue declining slightly year-on-year to $121.7 million, BlackBerry’s QNX business grew by 8.1%, offsetting a 7.3% decline in secure communications revenue, reflecting a mixed but generally positive outlook in a resilient sector.

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