Macy’s Surpasses Earnings Expectations

LOCAL MARKET COMMENTARY

On the stock market, the Top 40 index and the All Share index closed 0.4% and 0.3% lower on Tuesday, ending at 73,439 and 79,808 points, respectively. Earlier, data from the central bank revealed that South Africa's composite leading business cycle indicator fell by 1.9% month-on-month in March. This indicator gathers data on business confidence, money supply, and other factors to provide an outlook for the economy. Coronation, a Cape Town-based fund manager embroiled in a R700 million tax dispute with the South African Revenue Service, announced the resumption of interim dividend payouts.

EUROPEAN MARKET COMMENTARY

European markets closed lower on Tuesday, reversing the positive sentiment from earlier in the week. With limited data releases, investors are anticipating the upcoming U.K. inflation report, which is expected to show a significant drop in the headline rate. The Stoxx 600 index ended down 0.21%, with most sectors declining. Food and beverage stocks fell by 0.83%, while mining stocks saw a 0.75% increase.

US MARKET COMMENTARY

U.S. stocks closed with slight gains on Tuesday, pushing the S&P 500 and Nasdaq to record levels, as investors analysed comments from Federal Reserve officials regarding the timing of potential rate cuts. Anticipation is building for Nvidia's quarterly earnings report on Wednesday, which is expected to significantly impact the market and test the sustainability of the rally in AI-related stocks. Additionally, investors are awaiting the minutes from the Fed's latest policy meeting, set to be released today, after officials emphasized the need for patience before cutting interest rates.

ASIA MARKET COMMENTARY

Asian shares edged higher this morning, though Japan's Nikkei slipped 0.6% as a weak yen boosted exports but also increased imported inflation, affecting business sentiment. Data from Japan's Ministry of Finance revealed that exports rose for the fifth consecutive month in April, increasing by 8.3% year-over-year. However, this fell short of the 11.1% gain anticipated by analysts, as shipment volumes struggled amid soft demand.

CURRENCY MARKET COMMENTARY

The South African rand climbed to a 10-month high on Tuesday, driven by growing expectations that the upcoming general election would not unsettle markets. Meanwhile, the dollar remained stable against several major currencies on Wednesday as investors considered the Federal Reserve officials' calls for patience and anticipated the release of Fed minutes for further guidance on the central bank's plans.

COMMODITY MARKET COMMENTARY

Gold prices declined this morning, retreating from Monday's record high, as Federal Reserve officials emphasized the need for more evidence of easing inflation before cutting interest rates. This stance could strengthen the U.S. dollar, further pressuring gold. Meanwhile, oil prices dropped for the third consecutive session amid expectations that the Fed will maintain higher interest rates to combat persistent inflation, potentially reducing fuel demand in the U.S., the world's largest oil consumer.

Hosken Consolidated Investments Limited (HCI) +1.14%

Shareholders are advised that for the year ended 31 March 2024, the Company expects to report basic earnings per share between 606.8 cents and 1,003.3 cents, a decrease of 84.7% to 74.7% compared to 3,965.7 cents the previous year. Headline earnings per share are anticipated to be between 1,351.4 cents and 1,556.5 cents, a decline of 34.1% to 24.1% from 2,050.7 cents the previous year.

Coronation Fund Managers Limited (CML) +3.17%

Revenue increased by 4.3% to R1,893 million from R1,815 million in the previous corresponding period. Basic earnings and headline earnings per share rose significantly to 200.5 cents per share from 6.2 cents per share. Fund management earnings per share, which exclude the net mark-to-market impact of fair value gains and losses and related foreign exchange on investment securities, increased to 185.8 cents per share from a loss of 13.0 cents per share. An interim dividend of 185.0 cents per share was declared for the period ended 31 March 2024, compared to no dividend in the prior corresponding period.

Tharisa PLC (THA) -0.83%

Tharisa is preparing to release its interim financial statements for FY2024 on or around May 23, 2024. For the six months ended March 31, 2024, Tharisa expects headline earnings per share (HEPS) to be between US 12.5 cents and US 13.5 cents, a decrease of 23.3% to 29.0% from US 17.6 cents in the same period last year. Basic earnings per share (EPS) are also expected to be between US 12.5 cents and US 13.5 cents, down 22.4% to 28.2% from US 17.4 cents. Both HEPS and EPS declines are partly due to a nearly 40% drop in PGM prices and increased cost pressures.

Alexander Forbes Group Holdings Limited (AFH) +1.54%

Based on current information, the company expects the financial results for the period ended March 2024 to show the following compared to March 2023: Total operations headline earnings per share (HEPS) are expected to increase by 23% to 33%, from 47.7 cents to between 58.7 and 63.4 cents. Total operations basic earnings per share (EPS) are expected to decrease by up to 10%, from 57.1 cents to between 51.4 and 57.1 cents. For continuing operations, HEPS are expected to increase by 10% to 20%, from 45.5 cents to between 50.1 and 54.6 cents, and EPS are expected to increase by 0% to 10%, from 44.0 cents to between 44.0 and 48.4 cents. For discontinued operations, HEPS are expected to increase by 282% to 300%, from 2.2 cents to between 8.4 and 8.9 cents, while EPS are expected to decrease by 15% to 35%, from 13.1 cents to between 8.5 and 11.1 cents.

Macy's Inc. (M) +5.13%

Macy's reported better-than-expected fiscal first-quarter earnings on Tuesday, with adjusted earnings per share of 27 cents versus the 15 cents expected by analysts. Revenue was roughly in line with expectations at $4.85 billion, slightly below the $4.86 billion anticipated. Despite a 60% drop in net income to $62 million and a decline in net sales from $4.98 billion a year ago, Macy's raised its full-year earnings expectations, citing early signs of momentum in its turnaround strategy. The company now forecasts net sales between $22.3 billion and $22.9 billion and adjusted earnings per share between $2.55 and $2.90, up from the previous range of $2.45 to $2.85. Shares of Macy's closed about 5% higher following the announcement.

Lowe's Companies Inc. (LOW) -1.88%

Lowe's surpassed Wall Street's expectations for its quarterly earnings and revenue, reporting earnings per share of $3.06 compared to the expected $2.94 and revenue of $21.36 billion versus the anticipated $21.12 billion. Despite a decrease in net income to $1.76 billion and a drop in sales from $22.35 billion in the previous year, Lowe's reaffirmed its full-year forecast. The company expects total sales between $84 billion and $85 billion, a decline from fiscal 2023, and comparable sales to decrease between 2% and 3% compared to the prior year. Lowe's also anticipates earnings per share of approximately $12 to $12.30 for the full year. While the company's stock price closed at $229.17 on Monday, with a market value of $131.13 billion, its year-to-date performance has lagged behind the broader market, with a nearly 3% increase compared to the S&P 500's 11% gains.

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