Airbus Slips as A321neo Quality Issue Raises Delivery Focus

Market Commentary

South African Market Summary

The JSE All Share index fell 0.66% on Friday to 110,826.04 points, while the Top 40 declined 0.65% to 103,152.21. The South African Reserve Bank raised the repo rate by 25 basis points to 7.25%, citing large and sustained price shocks from the Iran conflict and the need to prevent inflation becoming entrenched. Governor Lesetja Kganyago stressed the importance of returning inflation to the 3% target as fuel-price pressures ease. Investors now await month-end data covering money supply, private-sector credit, trade and budget balances, producer inflation and formal-sector employment. Gemfields guided for a $73.5 million H1 loss, largely reflecting a $125.2 million MRM impairment, while Sasol announced board changes and South32 released final-dividend currency conversion details.

European Market Summary

European equities ended higher on Friday, snapping a three-week losing streak as easing oil prices provided some relief, although Middle East tensions and elevated bond yields kept investors cautious. The STOXX 600 gained 0.4% on the day and 0.5% for the week, its strongest weekly advance since early August. German GfK consumer confidence for October deteriorated to -30.6 from -26.8, missing expectations of around -27.4 as higher energy costs weighed on household income expectations. Spain’s final second-quarter GDP confirmed growth of 0.7% quarter-on-quarter and 2.6% year-on-year. Eurozone M3 money supply growth accelerated to 3.5% year-on-year, while private-sector lending rose 3.1%. Airbus declined about 1.3% after identifying a fuselage coating defect affecting hundreds of A321neo aircraft while maintaining its 2026 delivery target.

US Market Summary

Wall Street finished higher on Friday, supported by gains in Microsoft and other AI-linked technology shares, although elevated oil prices and a recent rise in US Treasury yields kept sentiment cautious. August durable-goods orders were unchanged month-on-month, outperforming expectations for a roughly 0.3% decline, while core orders excluding transportation rose 0.3%. Final University of Michigan consumer sentiment fell to 48.1 from 51.7 in August, its weakest level in four months, while one-year inflation expectations increased to 4.6% and five-year expectations edged up to 3.4%. Microsoft rallied after unveiling an expanded Copilot offering featuring Home, Code and persistent Autopilot agents. Akamai surged after signing a seven-year, $11.6 billion cloud-services agreement with Anthropic, including warrants potentially giving Anthropic up to a 5% stake.

Asian Market Summary

Asian markets opened cautiously on Monday as renewed gains in oil prices and uncertainty over a potential US-Iran truce kept inflation and bond-market concerns elevated ahead of a data-heavy week. Hong Kong private home prices stabilised in August, with the price index rising 0.06% month-on-month after a revised 0.8% decline in July, the first monthly fall since March 2025. Prices have nevertheless gained 7% over the first seven months of 2026. In China, industrial profit growth slowed further in August as strength in technology manufacturing linked to the AI boom was outweighed by weak domestic demand. Soft consumption and excess capacity continue to constrain pricing power, encouraging manufacturers to rely more heavily on export markets despite rising geopolitical tensions and increased scrutiny of China’s trade surplus.

Currency Market Summary

The South African rand weakened on Friday and extended losses this morning as markets digested the SARB’s interest-rate increase alongside expectations that US rates will remain elevated. The dollar strengthened towards a two-month high, supported by rising oil prices amid the US-Iran standoff and expectations of further Federal Reserve tightening. The dollar index edged up to 101.15 and is on track for a 1.7% September gain, its strongest monthly performance since June, while the euro and sterling each weakened 0.1%. Attention now turns to key US economic releases, including the PCE Index on Wednesday and non-farm payrolls on Friday, both expected to remain consistent with tighter monetary policy. Markets currently price a 65% probability of another Federal Reserve rate increase at its late-October meeting.

Commodity Market Summary

Gold fell more than 1% on Monday as rebounding oil prices intensified inflation concerns and reinforced expectations of further Federal Reserve tightening. Oil gained over 1% after US President Donald Trump rejected Iran’s peace proposal aimed at resolving the conflict and reopening the Strait of Hormuz, although further negotiations are expected this week. Middle East tensions remained elevated after Saudi-led forces intercepted missiles and drones launched by Iran-backed Houthis towards Saudi Arabia. Supply concerns were partly offset by stronger regional crude flows, with exports from major Middle Eastern producers rising to 12.8 million barrels per day in September, the highest since the conflict began. Shipments through the Strait of Hormuz are expected to reach around 7.4 million barrels per day this month as Saudi Arabia and the UAE increased exports.

Domestic Company News 

Sappi Limited (SAP) -3.59%
Sappi has secured an extension to the leverage covenant relief applicable to its international revolving credit facility and bank term debt, providing additional financial flexibility through December 2027. The existing suspension of leverage covenant testing, previously due to expire in March 2027, has been extended to June 2027. Thereafter, Sappi and its banking group have agreed specific leverage covenant levels that will gradually decline over time, while maintaining sufficient flexibility and headroom for the Group. The revised arrangements are intended to support Sappi’s ongoing operational and strategic objectives and reflect continued cooperation with its lenders. Management will remain engaged with the banking group regarding covenant requirements beyond December 2027, as appropriate, while operating under the amended framework during the interim period.

Texton Property Fund Limited (TEX) -5.45%
Texton reported distributable income of R65.5 million for FY26, down from R73.8 million in FY25, largely reflecting disposals of unlisted investments, partly offset by lower net finance costs. The REIT declared a dividend of 18.45 cents per share. South African like-for-like net property income was broadly stable at R130.1 million versus R129.1 million, while core vacancy rose to 14.6% from 8.6%, mainly due to additional self-storage GLA. UK net property income declined by R5.6 million following the disposal of Gainsborough and Peterlee, partly offset by a R4.0 million contribution from North Carolina. Offshore liquidity initiatives included the $6.3 million BREIT exit and $1.8 million SREIT redemption, while remaining unlisted investments were pressured by lower fair values and rand strength during the year.

Gemfields Group Limited (GML) 0.00%
Gemfields expects a net loss after tax of USD73.5 million for H1 2026, widening from USD20.5 million, primarily due to a USD125.2 million non-cash impairment at Montepuez Ruby Mining. MRM revenue rose to USD76.1 million from USD38.9 million, while Kagem generated USD26.7 million versus USD21.1 million, taking total auction revenue to USD102.8 million, partly reflecting deferred ruby sales. Loss per share is expected at USDc4.3, while headline earnings per share improved to USDc0.6 from a USDc1.5 loss. Lower-than-expected premium ruby recoveries at MRM weighed on performance, although recent recoveries have shown early improvement. Kagem delivered solid operational performance and premium emerald recoveries, while management remains focused on sustaining MRM improvements, operational reliability and financial discipline through the remainder of 2026.

Global Company News

Airbus SE (AIR) -1.02%
Airbus shares fell around 1.3% after the planemaker confirmed a quality issue affecting the fuselages of hundreds of A321neo aircraft. The problem involves an incorrectly applied anti-corrosion primer on fuselage stringers supplied externally, although Airbus said safety was unaffected and a repair had been identified. The company maintained its 2026 delivery target of approximately 870 aircraft, having delivered 475 between January and August. Airlines continue accepting affected jets, in some cases with concessions linked to future maintenance. Analysts expect the availability of a fix to limit the longer-term impact, although delivery execution remains under scrutiny as Airbus works towards record annual deliveries and a production rate of 75 aircraft per month. The latest issue follows fuselage-panel problems that disrupted deliveries during 2025.

Akamai Technologies Inc. (AKAM) +3.20%
Akamai Technologies signed a seven-year, $11.6 billion cloud services agreement with Anthropic, sending its shares 22% higher in extended trading. The deal includes a warrant allowing Anthropic to acquire up to 5% of Akamai, with roughly 2% linked to the initial commitment and a further 3% vesting if the agreement expands by as much as $9 billion. Akamai expects approximately $5.5 billion of capital expenditure to support the contract and will increase 2026 capital spending by about $1.7 billion to secure components, including memory. The company said the agreement will not affect its annual revenue forecast. Separately, Akamai authorised Jabil to purchase around $1.7 billion of memory components under an existing services agreement, supporting infrastructure required for the Anthropic deployment.

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