Tesla Soars to Biggest Gain in Over 10 Years

LOCAL MARKET COMMENTARY

n Thursday, South Africa's blue-chip Top 40 index rose by 0.45% to 78,881 points, while the broader All Share index gained 0.55% to close at 86,937 points. The rise was driven by a surge in platinum group metals (PGMs) miners, as global palladium prices increased amid concerns over potential U.S. sanctions on Russia. Shares of Anglo American Platinum and Northam Platinum jumped by more than 13%. Anglo American PLC also reported progress in simplifying its portfolio, describing its production performance as "stable" for the first nine months of 2024. Meanwhile, retailer Clicks posted a 14.3% increase in headline earnings per share for the year ending 31 August 2024.

EUROPEAN MARKET COMMENTARY

European shares ended mostly flat on Thursday, giving up early gains as investors weighed signs of slowing business activity and reviewed earnings reports from companies like online gaming group Evolution, carmaker Renault, and consumer goods giant Unilever. A survey indicated that euro zone business activity continued to stall and remained in contraction, dampening market optimism. Although the STOXX index had a strong start to the year amid hopes for interest rate cuts by the European Central Bank, it has recently stagnated as concerns over a slowing economy grow.

US MARKET COMMENTARY

The Nasdaq and S&P 500 rose on Thursday, supported by Tesla's positive earnings outlook and a drop in Treasury yields from a three-month high, which boosted market sentiment despite mixed corporate earnings. Stocks had pulled back recently due to concerns over the Federal Reserve's interest rate policies, rising Treasury yields, corporate earnings, and uncertainty surrounding the upcoming U.S. election. On the economic front, U.S. business activity grew in October, according to S&P Global's flash PMI data, driven by strong demand, while weekly jobless claims unexpectedly declined.

ASIA MARKET COMMENTARY

Asia-Pacific markets mostly declined this morning. In October, core inflation in Tokyo dropped below Japan's central bank's 2% target for the first time in five months, potentially complicating future interest rate hikes. The Tokyo core consumer price index (CPI), excluding fresh food costs, increased 1.8% year-on-year, slowing from September's 2% but slightly above market expectations of 1.7%. Additionally, services inflation slowed, casting doubt on the Bank of Japan's hopes for wage-driven price stability around 2%. Meanwhile, China’s central bank maintained its interest rate in a 700 billion yuan ($98.36 billion) medium-term loan operation, issuing loans at 2.00% to select financial institutions.

CURRENCY MARKET COMMENTARY

On Thursday, South Africa's rand strengthened against a weaker U.S. dollar, while shares of local platinum group metals (PGMs) producers surged. This increase in PGM stock prices was driven by concerns over potential supply sanctions on Russia, the world's leading producer of palladium. The dollar weakened this morning after experiencing its largest drop in a month against major currencies. This decline followed a dip in U.S. Treasury yields from near three-month highs, as lower Treasury prices attracted buyers, easing pressure on the dollar.

COMMODITY MARKET COMMENTARY

Gold prices dipped slightly this morning but remained set for a weekly gain as investors sought safety amid rising geopolitical tensions. Palladium was also headed for its best week in over a month. Oil prices rose, tracking toward a weekly gain of over 1%, as tensions in the Middle East and upcoming Gaza ceasefire discussions kept markets on edge.

Clicks Group Limited (CLS) +1.60%

The company saw strong performance, with group turnover growing by 9.2% and retail turnover rising 11.7%. Trading margin improved by 50 basis points to 9.2%, and diluted headline earnings per share (HEPS) increased by 14.3%. The total dividend also grew by 14.3%, reaching 776 cents per share. The business generated R6.0 billion in cash from operations, returning R2.5 billion to shareholders. Return on equity was 46.4%, and total shareholder return averaged 20.7% per year over the past decade.

Afrimat Limited (AFT) +1.15%

The company achieved a 44.3% increase in group revenue, reaching R4.1 billion. An interim dividend of 10.0 cents per share was declared, with headline earnings per share (HEPS) at 53.0 cents. The operating profit margin stood at 13.5%, and net asset value (NAV) per share rose by 10.5% to 3,038 cents. Additionally, the return on net operating assets was 15.1%.

Datatec Limited (DTC) +2.98%

For the six months ending 31 August 2024, the company reported revenue of $2.61 billion, a 5.5% decrease compared to the same period in 2023. Gross profit increased by 3.5% to $432.7 million, and EBITDA rose significantly by 27.2% to $102.5 million. Underlying earnings per share grew by 56.2% to 11.4 US cents, while headline earnings per share increased by 66.7% to 10.5 US cents. Net asset value improved by 3.3% to $491.9 million, and net debt decreased by 38.0% to $108.4 million. An interim dividend of 75 ZAR cents per share was declared.

Nu-World Holdings Limited (NWL) +3.45%

For the year ended 31 August 2024, the company reported an 8.3% increase in total revenue to R2.06 billion. Basic earnings rose by 4.7% to R73.9 million, with basic earnings per share up 6.5% to 351.5 cents. Headline earnings per share grew by 7.1% to 353.1 cents. Net asset value per share increased by 3.3% to 7,414.4 cents, and the dividend per share was up 8.3% to 135.7 cents.

Tesla Inc. (TSLA) +21.92%

Tesla shares surged nearly 22% on Thursday, marking their biggest one-day gain in over a decade, following CEO Elon Musk’s upbeat sales forecast. Musk predicted 20%-30% sales growth for next year, with plans to launch a more affordable vehicle in early 2025, while efforts to reduce production costs helped boost profits in the third quarter. The stock hit $262.2 at its peak, adding nearly $150 billion to Tesla’s market value. Tesla also reported strong quarterly margins, with production costs per vehicle dropping to a record low of $35,100, and generated $326 million in revenue from its Full Self-Driving autopilot software.

Vale S.A. (VALE3) +0.59%

Brazilian mining giant Vale reported a 15% drop in third-quarter net profit, impacted by lower iron ore prices and provisions related to the Mariana dam collapse. Despite the challenges, Vale's net profit for the quarter was $2.41 billion, beating analysts' expectations of $1.65 billion. Revenue fell 10% to $9.55 billion, aligning with forecasts. While Vale achieved its highest iron ore production since 2018, a 14% drop in realized iron ore prices weighed on profits. The company’s adjusted EBITDA was $3.62 billion, down 18% from last year but close to analyst estimates.

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