Tesco Forecasts Profit Surge Amid Improving Consumer Sentiment.

LOCAL MARKET COMMENTARY

On the stock market, the Top 40 index experienced a marginal decline of 0.01%, closing at 69,276 points, while the broader All Share index saw a very minimal gain of 0.04%, ending the day at 75,520 points. Ellies Holdings, a longstanding household name in South Africa's electronics industry, revealed in a late Wednesday statement on Sens that it will undergo liquidation. Meanwhile, Sibanye Stillwater announced its intention to potentially raise approximately $500 million through metals streaming and prepayment arrangements to strengthen its cash reserves, despite observing improvements in metal prices and the market outlook.

EUROPEAN MARKET COMMENTARY

European stocks closed higher on Wednesday, with investors now focusing on the European Central Bank's (ECB) upcoming policy meeting today, which is expected to keep rates unchanged. The meeting is anticipated to centre around discussions about a potential rate cut in June, with both hawks and doves showing support for the idea. The pan-European Stoxx 600 index ended the day up 0.12%, recovering from earlier losses. Initially, technology stocks, sensitive to interest rate sentiment, dipped before bouncing back to close the session up 0.5%.

US MARKET COMMENTARY

U.S. stocks closed lower on Wednesday following the release of hotter-than-expected inflation data, dampening hopes for an early interest rate cut by the Federal Reserve. All three major U.S. stock indexes plummeted sharply at the opening bell after the Labor Department's Consumer Price Index (CPI) report exceeded expectations, underscoring the prolonged and uncertain path toward the Fed's 2% inflation target. Minutes from the Fed's recent meeting also revealed lingering concerns among some officials about inflation reaching the central bank's goal.

ASIA MARKET COMMENTARY

Asia-Pacific markets experienced a downturn this morning, with China's consumer inflation easing to 0.1% in March from 0.7% in February, below economists' expectations of a 0.4% increase, while the producer price index recorded a 2.8% decline year-on-year, as anticipated. Hong Kong's Hang Seng index fell by 1.18%, whereas mainland China's CSI 300 index saw a smaller loss of 0.56%. South Korean markets resumed trading after a public holiday.

COMMODITY MARKET COMMENTARY

Gold prices retreated from record highs on Wednesday as the U.S. dollar and Treasury yields strengthened following a stronger-than-expected inflation report, reducing expectations of an imminent U.S. interest rate cut. Meanwhile, oil prices rebounded on Wednesday after two days of losses, driven by ongoing concerns about the lack of progress in Gaza ceasefire negotiations, heightening worries about oil supply stability in the Middle East. Despite this rebound, both benchmark prices remain approximately 1.7% lower compared to the previous week's close.

CURRENCY MARKET COMMENTARY

On Wednesday, South Africa's rand weakened as the U.S. dollar surged following data indicating a rise in U.S. inflation for March, diminishing prospects of a Federal Reserve interest rate cut in June. Market uncertainty ahead of the upcoming general elections, just over six weeks away, also contributed to rand weakness, particularly after an opinion poll released earlier in the day showed the governing African National Congress's voter support at 37%. The dollar remained strong this morning following hotter-than-expected U.S. inflation data, further diminishing expectations of the Fed initiating a rate-cutting cycle in June.

Tharisa PLC (THA) +0.00%

In the quarter ending March 2024, safety improved with fewer injuries reported at both Tharisa Minerals and Karo Platinum. Platinum Group Metals (PGM) production remained steady at 35.3 thousand ounces, while the price of PGM basket slightly decreased to US$1,343 per ounce. Chrome output decreased compared to the previous quarter, with 402.7 thousand tons produced, and the price for chrome concentrate stayed stable at US$286 per ton. The company's cash decreased to US$184.6 million, with a debt of US$114.0 million, resulting in a net cash position of US$70.6 million. A share repurchase of US$5 million was announced, and Redox One was officially launched at the Africa Energy Indaba. Production guidance for the fiscal year 2024 remains between 145 and 155 thousand ounces of PGMs and 1.7 to 1.8 million tons of chrome concentrates.

Ellies Holdings Limited (ELI) -50.00%

Shareholders were informed through a January 31 2024 announcement on SENS that Ellies had initiated voluntary business rescue proceedings under section 129(1) of the Companies Act 71 of 2008. Subsequently, on February 6, 2024, it was disclosed that a business rescue practitioner had been appointed. However, the practitioner has determined that there is no viable chance of rescuing the company. As per section 141(2)(a)(ii) of the Companies Act, an application will be made to the court to cease the business rescue proceedings and place Ellies into liquidation.

Tesco PLC (TSCO) -4.28%

Britain's largest retailer, Tesco, anticipates a continued increase in profits, buoyed by early signs of improving consumer sentiment and gains from competitors that contributed to an 11% surge in the previous year. CEO Ken Murphy expressed optimism for 2024, citing factors like easing food inflation, lower energy prices, and stable employment levels. The supermarket giant, holding a 27.3% share of the UK grocery market, expects retail adjusted operating profit of "at least" £2.8 billion ($3.55 billion) for the 2024/25 fiscal year, surpassing the £2.76 billion earned in the previous year. Sales, excluding VAT and fuel, rose by 7.4% to £61.5 billion, with UK like-for-like sales up 7.7%, driven by increased volumes in the second half. Tesco's shares rose by 3.8%, marking a 12% year-on-year increase, prompting an 11% dividend raise and plans to repurchase £1 billion worth of shares over the next year.

Delta Air Lines Inc. (DAL) -2.28%

Delta Air Lines returned to profitability in the first quarter, with CEO Ed Bastian reporting strong bookings for both leisure and business travel as the peak travel season approaches, despite ongoing inflation challenges. The airline giant forecasted second-quarter earnings of $2.20 to $2.50 per share, slightly below analysts' average forecast of $2.23 per share according to LSEG. Delta expects revenue in the current period to potentially increase by as much as 7%, surpassing analysts' estimates. It also reiterated its full year forecast of $6 to $7 per share and projected free cash flow between $3 billion and $4 billion. Delta reported a profit of $37 million, or 6 cents per share, in the first quarter, compared to a loss of $363 million, or 57 cents per share, in the same period last year. Adjusted earnings stood at $288 million, or 45 cents per share, up from $163 million, or 25 cents per share, in the first quarter of 2023. Revenue, adjusted to exclude refinery sales, reached $12.56 billion, a 6% increase from the previous year, albeit slightly below analysts' expectations.

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