In this edition of Lens on Markets, we look at how, AstraZeneca maintained its 2026 guidance and longer-term revenue ambitions after second-quarter core earnings exceeded expectations.
Market Commentary
South African Market Summary
South African equities advanced on Monday, with the JSE All Share gaining 0.65% to 110,109.61 and the Top 40 rising 0.66% to 102,102.83. Vodacom upgraded its medium-term growth targets after completing the acquisition of a controlling stake in Safaricom, while reducing its dividend payout ratio. First-quarter group service revenue increased 6.3% to R34.3 billion, supported by strong growth in Egypt and other African markets. Impala Platinum suspended mining at its Rustenburg operations to conduct a comprehensive safety reset following recent injuries and fatalities. Separately, South African Reserve Bank Governor Lesetja Kganyago confirmed that the Angolan kwanza had become the first additional settlement currency introduced to the Southern African regional payment system since its launch in 2013, expanding regional currency coverage.
European Market Summary
European equities finished broadly unchanged on Monday as weakness in technology shares offset support from easing US-Iran tensions and lower oil prices. The STOXX 600 closed flat at 644.52 after briefly reaching its highest level since 7 July. Technology stocks fell 1.7%, led by an 8.4% decline in ASML following reports that China had begun producing domestically developed immersion deep ultraviolet lithography machines. Elsewhere, AstraZeneca gained 1.7% after beating second-quarter profit expectations and reaffirming its 2026 guidance, while Vodafone rose 4.9% after upgrading its outlook following the Safaricom transaction. In the United Kingdom, annual retail price growth slowed to 0.9%, the weakest since December 2025, as promotions and World Cup-related discounting restrained increases across food, clothing, footwear and other goods.
US Market Summary
Wall Street finished mixed on Monday as investors awaited quarterly results from major technology companies and assessed whether elevated oil prices could prompt tighter Federal Reserve policy. Microsoft, Amazon, Meta and Apple report this week, with markets focused on whether artificial-intelligence investment can continue supporting earnings growth. Traders assign a 62% probability to unchanged rates on Wednesday and a 38% chance of a 25-basis-point increase. June’s Personal Consumption Expenditures Price Index, due Thursday, will influence expectations for policy later this year. Analysts expect aggregate second-quarter S&P 500 earnings to rise 39% from a year earlier, largely driven by AI-linked companies. Trading activity remained subdued, with 15.8 billion shares changing hands versus the recent 20-session average of 18.2 billion.
Asian Market Summary
Asian equities declined sharply on Tuesday as concerns over the capital intensity of the artificial-intelligence investment cycle pressured semiconductor shares. South Korea’s KOSPI fell more than 8%, triggering a circuit breaker, while Japan’s Nikkei dropped 4% after weakness in US chip stocks. In contrast, CXMT’s 466% Shanghai debut highlighted strong demand for China’s semiconductor sector and growing competitive pressure on established suppliers. Reports that China had begun producing domestically developed immersion lithography equipment contributed to an 8.5% decline in ASML shares. Meanwhile, Reserve Bank of Australia Governor Michele Bullock warned that inflation remained too high and further rate increases could be required. Pakistan’s central bank held its policy rate at 11.50% amid energy-price and inflation risks linked to US-Iran tensions.
Currency Market Summary
The South African rand strengthened in early trade on Monday, recovering part of the previous week’s losses as a pause in hostilities between the United States and Iran drove oil prices lower and improved risk appetite. Cheaper crude offered relief for South Africa’s inflation outlook, given the country’s dependence on imported fuel. The dollar remained near a one-month high, weighing on gold by making the metal more expensive for holders of other currencies. Attention now turns to the Federal Reserve’s policy decision on Wednesday. Markets assign a 62% probability to unchanged rates and a 38% chance of at least a 25-basis-point increase, while expectations for a September hike stand at 81%. President Donald Trump called for lower US interest rates.
Commodity Market Summary
Oil prices declined 1% on Tuesday as investors assessed a pause in United States strikes on Iran and the possibility of a diplomatic resolution that could restore normal Middle East energy flows. President Donald Trump said discussions with Iran were progressing, although he warned that military action could resume if negotiations failed. Iran issued similar warnings regarding retaliation. In the United States, preliminary estimates indicated crude and gasoline inventories likely fell last week, while distillate stocks probably increased. Gold prices weakened as a firmer dollar reduced demand from holders of other currencies. Market attention remained focused on the Federal Reserve’s policy decision, with investors seeking guidance on the outlook for interest rates and the implications for commodities and financial markets.
Domestic Company News
Vodacom Group Limited (VOD) +2.43%
Vodacom reported group revenue growth of 5.9% to R42.4 billion for the quarter ended 30 June 2026, while normalised growth reached 11.4% after adjusting for currency and portfolio effects. Group service revenue increased 6.3%, or 12.6% on a normalised basis. South African service revenue rose 2.0%, supported by improved prepaid trading. Egypt delivered 32.8% local-currency service revenue growth, alongside a 73.0% increase in financial services revenue. International service revenue advanced 4.1% in rand terms and 14.0% on a normalised basis. Group financial services revenue climbed 17.8% to R4.5 billion. Mobile money platforms processed US$547.9 billion over the preceding twelve months. The completed Safaricom transaction, effective 30 June, prompted upgraded medium-term guidance, enhanced Vision 2030 ambitions and a revised dividend policy.
Mpact Limited (MPT) -3.62%
Mpact expects weaker earnings for the six months ended 30 June 2026 as lower paper mill margins outweighed improved volumes and profitability in Paper Converting and Plastics. EBITDA is projected to decline 4% from R642 million, while underlying operating profit is expected to fall 16% from R337 million. Continuing operations EPS and HEPS are forecast between 45 and 55 cents, representing declines of 47% to 57%. Total operations will reflect losses following the closure of Springs mill’s BM6 machine and associated restructuring, impairment and retrenchment costs of R299 million. Net debt improved to about R2.6 billion from R3.0 billion. Mpact remains within banking covenants, while seasonal demand and recent capital projects are expected to support second-half performance and medium-term recovery.
Merafe Resources Limited (MRF) +4.84%
Merafe Resources reported sharply lower attributable production for the six months ended 30 June 2026, with ferrochrome output falling 75% to 28kt after suspensions at the Wonderkop and Boshoek smelters and a partial suspension at Lion. Chrome ore production declined 4% to 425kt, while PGM concentrate output decreased 5% to 6.7koz. Despite weaker production, the company expects EPS of 19.5 to 21.4 cents, representing growth of 110% to 130%, and HEPS of 19.5 to 22.0 cents, up 55% to 75%. The improvement reflects higher commodity prices and sales volumes. Cash and treasury balances increased to approximately R1.59 billion from R1.16 billion, excluding R410 million reserved by Merafe for future environmental rehabilitation obligations. Interim results are expected on 11 August 2026.
Global Company News
AstraZeneca (AZN) +1.72%
AstraZeneca maintained its 2026 guidance and longer-term revenue ambitions after second-quarter core earnings exceeded expectations, despite recent clinical trial setbacks. Core earnings rose to $2.63 per share, above the $2.48 consensus, while revenue increased 5% to $15.38 billion, broadly matching forecasts. Oncology sales advanced 15% and rare-disease revenue grew 8%, offset partly by a 13% decline in China amid generic competition and policy changes. The group continues to target $80 billion in annual revenue by 2030 and expects 2026 core earnings per share to grow by a low double-digit percentage at constant currencies. AstraZeneca also initiated six Phase III trials of oral obesity candidate elecoglipron, while approximately 20 late-stage study readouts are expected over the next 18 months.
Vodafone Group (VOD) +4.84%
Vodafone raised its full-year guidance after completing the Safaricom transaction and reporting solid first-quarter trading. Organic service revenue increased 5.2%, supported by broad-based growth across the group, particularly in Turkey and Africa. Adjusted core earnings rose 6.2%, reflecting revenue growth and continued cost savings. For the year ending March 2027, Vodafone now expects adjusted core earnings of €13.0 billion to €13.3 billion and adjusted free cash flow of €2.6 billion to €2.9 billion. Management indicated that performance was tracking towards the upper end of both ranges. The revised outlook incorporates Safaricom following Vodafone’s acquisition of control in June, while aligning closely with analyst expectations for adjusted core earnings of €13.1 billion and free cash flow of approximately €2.78 billion annually.
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Research Team