Bayer beats Q1 expectations as Crop Science strength offsets pharma patent pressures

Market Performance

South African Market Summary

South African equities closed weaker yesterday, with the JSE All Share index falling 1.42% to 116,762.58 points and the Top 40 losing 1.52% to 109,063.50 points. Sentiment was pressured by labour-market data showing the unemployment rate increased to 32.7% in the first quarter of 2026, from 31.4% in the previous quarter, as the number of unemployed people rose to 8.137 million. Job losses were broad-based, with only three of the 10 sectors tracked by Stats SA recording gains. The expanded unemployment rate also climbed to 43.7%, highlighting persistent structural weakness. Political uncertainty added to the cautious tone, as the ANC delayed its meeting on President Cyril Ramaphosa’s “Farmgate” matter.

European Market Summary

European equities closed lower on Tuesday, with the STOXX 600 falling 1.0% to 606.63 points as fading hopes for a US-Iran peace deal pushed oil prices higher and weakened risk appetite. Losses were broad-based across major regional markets, led by Germany’s DAX, which declined 1.6%. In the UK, political uncertainty added to the cautious tone as Prime Minister Keir Starmer faced calls to resign following Labour’s heavy losses in local elections. On the policy front, European Central Bank policymaker Joachim Nagel warned that interest rates may need to rise if the oil shock from the Iran war threatens to unanchor eurozone inflation expectations. German investor morale improved unexpectedly in May, although it remained firmly negative.

US Market Summary

US equities were mixed on Tuesday, with the S&P 500 and Nasdaq retreating from record highs as hotter-than-expected inflation data and renewed concerns over the fragile US-Iran ceasefire prompted profit-taking. Technology weakness weighed most heavily on the Nasdaq, while healthcare gains, supported by a rise in Humana, helped keep the Dow in positive territory. Consumer prices rose faster than expected as the closure of the Strait of Hormuz continued to disrupt crude supply, reinforcing concerns that elevated energy prices could feed into broader inflation. The prolonged Iran war also reduced expectations for Federal Reserve easing this year, while markets began pricing in a higher probability of a December rate hike. Trading volumes remained elevated across US exchanges.

Asian Market Summary

Asia-Pacific markets were mixed on Wednesday as investors assessed hotter-than-expected inflation data, higher oil prices and the continuing Middle East conflict. In Australia, wage growth remained moderate in the first quarter, with the wage price index rising 0.8% quarter-on-quarter, in line with expectations and unchanged from the previous quarter. Annual wage growth eased to 3.3% from 3.4%, while private-sector wage growth slowed to 3.2%, its weakest pace since late 2022. Public-sector wage growth also moderated to 3.3% from 4.0%, with healthcare and social assistance making the largest contribution. In Japan, household spending fell 2.9% year-on-year in March, extending its decline to a fourth consecutive month and underscoring pressure on consumer demand.

Commodity Market Summary

Gold edged lower on Wednesday as stronger-than-expected US inflation data reduced expectations for Federal Reserve rate cuts, despite persistent uncertainty in the Middle East. Oil prices also declined after three consecutive sessions of gains, with investors awaiting further developments around the fragile US-Iran ceasefire and President Donald Trump’s high-stakes meeting with Chinese President Xi Jinping in Beijing. Crude benchmarks have largely traded around or above US$100 per barrel since US and Israeli attacks on Iran began at the end of February and Tehran effectively shut the Strait of Hormuz, a key route for global oil and liquefied natural gas flows. Prices had risen more than 3% on Tuesday as hopes for a lasting ceasefire faded.

Currency Market Summary

The rand weakened on Tuesday, extending early losses after data showed South Africa’s unemployment rate increased in the first quarter of 2026, reinforcing concerns over the domestic growth and labour-market outlook. The dollar held near a one-week high on Wednesday as risk sentiment deteriorated following a hotter-than-expected US inflation reading, which pushed Treasury yields higher and reduced expectations for Federal Reserve rate cuts. The US dollar index was steady at 98.335, close to its strongest level in a week, after annual CPI rose 3.8% in April, its highest rate since May 2023. Middle East uncertainty also supported demand for the dollar, while comments from US Treasury Secretary Scott Bessent offered some support to Japan’s yen intervention stance.

Domestic Company News

Prosus N.V. (PRX) -5.29%

Prosus outlined a strong FY2026 performance and positioned FY2027 as a year of execution, innovation and disciplined investment. The group said it met guidance of more than US$7.3 billion in revenue and over US$1.1 billion in ecommerce adjusted EBITDA, excluding JET and La Centrale, with all ecosystems now profitable and free cash flow excluding Tencent continuing to grow. Management highlighted AI-led innovation as a key competitive advantage, including its Large Commerce Model, life assistants and agent technology, which is already being used across employee workflows and partner-facing applications. In Latin America, iFood delivered its FY2026 targets and continues to expand beyond food delivery into advertising, payments, meal vouchers and new categories, although increased investment to defend and grow market share is expected to reduce FY2027 adjusted EBITDA to US$100 million–US$150 million. In Europe, OLX exceeded US$450 million in adjusted EBITDA, while JET is expected to return to order and revenue growth by year-end, targeting more than US$3.6 billion in revenue and over US$100 million in adjusted EBITDA. In India, PayU is now profitable and increasingly acts as a connector across Prosus’ broader investment ecosystem. The group also reiterated its capital discipline, including a share repurchase programme running at around US$5 billion annually, disposals of US$2 billion in non-strategic assets in FY2026 and further Delivery Hero sales to meet European Commission obligations.

MTN Group Limited (MTN) -1.17%

MTN Group delivered a strong first-quarter performance, supported by sustained commercial momentum across key markets, including Nigeria, Ghana, Côte d’Ivoire and Cameroon. Group service revenue increased by 20.0%, or 21.1% in constant currency, while the EBITDA margin expanded by 3.0 percentage points to 47.6%, reflecting solid operational execution and cost discipline. Data remained a key growth driver, with revenue rising 36.1% and traffic increasing 20.2% to 6,827 petabytes, supported by an 8.7% increase in active data subscribers to 175.6 million. Fintech revenue grew 22.4%, with MoMo monthly active users up 8.2% to 67.4 million. MTN also maintained a strong balance sheet, with group leverage at 0.2x and HoldCo liquidity headroom of R42.6 billion.

Bytes Technology Group plc (BYI) +6.46%

Bytes Technology Group reported a mixed FY2026 performance, with gross invoiced income rising 11.5% to £2.34 billion, supported by 11.4% growth in software and a 24.6% increase in services. Revenue increased 1.6% to £220.5 million, while gross profit rose 2.5% to £167.3 million, with stronger second-half momentum as the impact of Microsoft incentive changes eased and sales-structure refinements settled. Public sector gross profit increased 7.4%, while private sector gross profit slipped 0.3%. Operating profit declined 5.6% to £62.7 million, reflecting slower gross profit growth and investment in people to support future expansion. The balance sheet remained strong, with £98.6 million in cash, 105.1% cash conversion, a 7.0p final dividend and a new £25 million buyback.

Global Company News

Bayer AG (BAYN) 3.67%

Bayer reported a stronger-than-expected first-quarter performance, with adjusted EBITDA rising 9% to €4.45 billion, comfortably ahead of consensus expectations of €3.93 billion. The result was supported by a sharp improvement in Crop Science, where earnings increased 17.9% to €3.0 billion after the resolution of a soy licensing dispute with Corteva improved access to the soy seed market. This helped offset pressure from the loss of patent protection on key pharmaceutical products, including Xarelto and Eylea. Bayer confirmed its currency-adjusted 2026 guidance, providing some reassurance as management continues to address litigation risks and debt. However, uncertainty remains around US Roundup lawsuits, while Bayer’s planned acquisition of Perfuse Therapeutics should strengthen its ophthalmology pipeline.

JD.com Inc. (9618) -0.08%

JD.com delivered first-quarter revenue and profit ahead of expectations, although investor focus remains on whether Chinese subsidy programmes can support demand amid tariff pressure, weak consumer confidence and higher living costs. Revenue for the quarter ended March reached RMB315.7 billion, above consensus expectations of RMB311.8 billion, helped by government trade-in incentives for appliances and electronics, despite an 8.4% year-on-year decline in those categories. Net income attributable to ordinary shareholders came in at RMB5.1 billion, ahead of expectations of RMB3.37 billion, but fell 53% from a year earlier as fulfilment, research and development, and marketing costs increased sharply. JD.com continues to pursue new growth avenues, including food delivery, although competition with Meituan and Alibaba is pressuring profitability.

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