Markets Update

Hinzugefügt: 2026-05-24

[00:00:00]Right, let's uh get a sense of how the markets are moving. I'm now joined by Fahima Adia, who's senior equity analyst at Momentum Securities. A very good afternoon to you. Thank you so much for your time and welcome. We know that US President Donald Trump says there's a deal coming soon as we look to the US Israel conflict and markets seem to be buying into that optimism. What Why are markets reacting reacting so strongly?

[00:00:30]Good afternoon, Bo. Good to be with you.

[00:00:32]Yes, I think there's a lot of volatility at the moment. Markets aren't quite sure if they can trust what Trump is saying because on one hand, he is saying that the US is in its final stages of talks with Iran, but also then warned at the same time that the US could attack Iran at any given time if they do not agree to the terms. And and so far, I think the two sides are still quite far apart when it comes to agreeing to the key terms of that deal. So, until there is clarity, I do think the markets will remain a bit more cautious. So, in the US, what's really been keeping markets buoyant has been the tech sector. But locally, I think the JSE has been weaker because as an emerging market, it is viewed as a riskier market and it has been impacted more, I'd say, from the uncertainty of the war. Yeah.

[00:01:21]What we're also seeing is oil prices falling while equity markets push higher. Could lower fuel costs materially improve the inflation outlook as we head into next week's very crucial MPC meeting?

[00:01:37]So, unfortunately, I do believe that inflation is going to stay elevated for a bit longer than we would hope because of this oil price. I mean, even if we saw the war come to an end tomorrow, we won't immediately see that oil price pull back just because there's been damage to infrastructure. Oil production will need to be restarted. There's massive backlogs at the Strait of Hormuz. So, all of this will take quite a bit of time for us to see that oil price normalize, and it is quite likely we will see inflation elevated for a few more months, which could result in a potential rate hike locally when the SARB has its meeting next week, and it will just result in a in a higher rate environment, I think, for the next few months. Mhm. As we touch a little bit on the MPC, after the latest inflation data and softer oil prices, what are expectations shifting towards? Is it more firmly toward a rate cut next week, or will the Reserve Bank perhaps remain a little bit cautious?

[00:02:38]So, I think the issue is we did already see the data come through on CPI showing that inflation has now hit 4%. It's actually the highest it's been in almost a year, and it's also above the Reserve Bank's new target of about 3%. So, that really does, I think, set the path for the Reserve Bank to actually increase interest rates as soon as next week, even. I think we could potentially see a 25-basis-point increase.

[00:03:03]Sure. Now, veering off slightly and looking at company news, uh fishing uh company Oceana delivered uh stronger profits but warned about headwinds ahead. What are the major risk factors facing food and fishing companies in the current environment?

[00:03:21]So, I think it did look like a decent update. The share price was actually up uh more than 8%, so the market quite liked it. But yes, there definitely still are headwinds there. Uh looking at the positive side of the business, Lucky Star Food actually saw some very strong growth, almost 40% in profits. Uh the Wild Coast Seafood side of the business also reported some strong profits, but that was offset, however, by uh fish meal and fish oil segments, which did show losses. Uh there's also been a lot of pricing volatility in that space and weakness. So, there have been improvements, but I think headwinds will persist especially because of this higher fuel price. I do think that will cut into costs and then the margins.

[00:04:03]And looking at mining, I mean Anglo America's Americans restructuring continues to draw a great deal of attention. From your perspective, is management successfully simplifying the business or perhaps does the market still have concerns about executive and long-term value creation?

[00:04:23]So, I think it's definitely made some good progress recently announcing that it's managed to dispose of the coal making business and that just allows it to largely focus now on copper, iron ore, and potash. The only headwind I would say that is still there is De Beers. De Beers has been a bit more challenging to sell just because the the weaker natural diamond price due to the influx of those lab-grown diamonds from China. But, they did say that they have potential buyers in at the likes of Angola or potentially Botswana. So, so far I think they've made good progress and the tech resources merger also looks very promising. Expected to really increase the exposure to copper and and it should be finalized towards the end of the year. And Nvidia once again beat expectations reinforcing the AI boom narrative. Are we still in the early innings of the AI investment cycle? What do you make of the space?

[00:05:18]So, I do think so. Well, the the numbers are really reflecting that. We're seeing big beats in terms of earnings, revenue, guidance has been lifted up. The gross margins on Nvidia was very strong at about 75%.

[00:05:32]And we're seeing strong demand for data center computing and AI in general. So, I do think that there is more to come here and there is really no stopping Nvidia now with a market cap of about 5.5 trillion dollars making it one of the biggest companies in the world. Very well. Thank you so much for speaking to us this afternoon. Fahima Edia, senior equity analyst at Momentum Securities, giving us a sense of how the markets are faring [music] and also what to look to as the MPC delivers its outcome next week.