J.M. Smucker jumps on upbeat profit outlook and margin recovery

Market Performance

South African Market Summary

South African markets edged higher yesterday, with the JSE All Share index gaining 0.04% to 111,129.58 points and the Top 40 adding 0.07% to 103,185.99 points. Investor sentiment was supported by first-quarter GDP growth of 0.5% quarter-on-quarter, ahead of Reuters-polled expectations of 0.3%, signalling modest resilience in the domestic economy. Policy developments also remained in focus, with government reviewing automotive incentives to include minerals used in electric vehicle battery production as it seeks to strengthen local EV manufacturing and supply chains. Eskom also launched a dedicated renewable energy unit, aligned with its target of up to 32GW of renewable capacity by 2040. Current account, mining and manufacturing data are due this week.

European Market Summary

European equities closed lower for a third consecutive session on Tuesday, with the STOXX 600 down 0.5% at 618.64 points as commodity-linked shares came under pressure despite a fragile Iran-Israel ceasefire. Mining and energy stocks led the decline, falling 2.5% and 2.4%, respectively, as investors reassessed geopolitical and demand risks. Italy’s banking sector remained active, with Monte dei Paschi di Siena receiving rival buyout proposals from Intesa Sanpaolo and Banco BPM, while Intesa proposed selling 635 MPS branches to Unipol to ease competition concerns. Macroeconomic data remained mixed, as German industrial production rose 0.4% in April, below expectations, while exports unexpectedly increased 0.9%. The ECB rate decision remains the key near-term catalyst.

US Market Summary

US equities weakened on Tuesday as an early rebound in technology shares faded and geopolitical risk again weighed on sentiment. The S&P 500 and Nasdaq declined after President Donald Trump said the US would respond to Iran’s reported downing of a US Apache helicopter near the Strait of Hormuz, raising doubts over the durability of a Middle East truce. Volatility spiked, with the VIX reaching its highest level since 7 April during the session, while trading volumes remained elevated at 24.77 billion shares. Technology remained under pressure, with the S&P 500 technology index closing 1.8% lower and the Philadelphia Semiconductor Index down 1.9%. Investors now await May CPI data for evidence of energy-driven inflation pressure.

Asian Market Summary

Asian equities fell on Wednesday as escalating Middle East tensions unsettled risk sentiment and drove oil prices higher, reinforcing concerns over inflation and corporate margin pressure. The United States launched strikes against Iran after President Donald Trump said Tehran had shot down a US Apache helicopter in the Strait of Hormuz, leaving investors cautious over the durability of a fragile ceasefire. In China, producer prices rose for a third consecutive month in May to their highest level since July 2022, while elevated consumer prices highlighted the impact of higher global energy costs on manufacturers and households. Japan also reported its fastest wholesale inflation in three years, strengthening expectations that the Bank of Japan could raise interest rates next week.

Commodity Market Summary

Commodity markets were mixed on Wednesday as renewed US-Iran hostilities lifted energy prices but weighed on gold. Gold fell more than 1% to an 11-week low as a stronger dollar and rising oil prices fuelled concerns that inflation pressure could keep interest rates higher for longer. Oil prices rose around 1%, recovering from recent seven-week lows, after the US military launched fresh strikes against Iranian targets following the reported downing of a US Apache helicopter near the Strait of Hormuz. Supply indicators also supported crude, with market sources citing American Petroleum Institute data showing US crude inventories fell for an eighth consecutive week, down 9.12 million barrels, while gasoline stocks declined by 1.19 million barrels.

Currency Market Summary

The rand strengthened on Tuesday after South Africa’s economy expanded more than expected in the first quarter of 2026, although investors remain alert to the likely inflationary and trade effects of the Iran war in future data releases. Sterling also gained ground, rising against the dollar and reaching a two-week high versus the euro as risk appetite improved and the US currency softened on hopes of a Middle East peace deal. The pound’s sensitivity to global trade and capital flows kept it supported during the risk-on move. By Wednesday, however, the dollar steadied against major peers after the United States launched strikes against Iran, with markets shifting focus to upcoming US inflation data and the Federal Reserve’s policy outlook.

Domestic Company News

Araxi Limited (AXX) -2.63%

Araxi reported a mixed FY2026 performance, with headline results distorted by the delayed delivery of a sizeable terminal order and a large five-year software licence fee recognised in the prior year. Reported revenue fell 6.8% to R1.17 billion, while EBITDA declined 16.4% to R279.3 million and HEPS decreased 18.2% to 14.37 cents. Underlying performance was firmer, with EBITDA rising 5.9% to R283.2 million, operating profit up 5.3% and underlying HEPS 10.1% higher, supported by cost reductions and improved software capacity utilisation. Cash generation remained strong, with cash from operations up 25% to R259.0 million. Customer terminals increased 5.4% to 447 000, recurring licence fees rose 31%, and the Pay@ acquisition strengthens future growth optionality.

Brikor Limited (BIK) -13.33%

Brikor expects a materially weaker FY2026 result, with management guiding for a deeper loss for the year ended 28 February 2026. The group expects EPS to deteriorate to a loss of between 1.10 cents and 1.30 cents per share, compared with a loss of 0.30 cents in the prior year, representing a decline of more than 100%. HEPS is also expected to swing sharply lower, moving to a loss of between 1.00 cents and 1.20 cents per share from a profit of 0.50 cents previously. The update indicates a significant deterioration in profitability ahead of the full annual results, which are expected before 19 June 2026. The trading statement has not yet been reviewed by the company’s auditors.

Global Company News

GSK PLC (GSK) -0.50%

GSK has agreed to acquire US-listed cancer drug developer Nuvalent for US$10.6 billion in cash, its largest transaction in more than a decade and a clear signal of new CEO Luke Miels’ oncology ambitions. The offer values Nuvalent at around US$124 per share, a 40% premium, and adds late-stage lung cancer assets that could help strengthen GSK’s pipeline ahead of the 2028 patent expiry of key HIV drug dolutegravir. Nuvalent’s lead drugs, zidesamtinib and neladalkib, are awaiting US decisions in September and November, with potential launches this year. GSK expects the deal to add to sales and operating profit in 2027 and core earnings per share in 2029.

J.M. Smucker Company (SJM) +10.44%

J.M. Smucker shares rose 12% after the packaged food group issued a stronger-than-expected fiscal 2027 profit outlook, supported by easing coffee costs, margin recovery and resilient demand for Uncrustables, Hostess donuts and pet products. The company expects adjusted earnings of US$9.75 to US$10.25 per share, with the midpoint ahead of analyst forecasts, despite guiding for a 3% to 4% decline in net sales. Lower green coffee prices are expected to weigh on revenue but support margins, with adjusted gross margin forecast to expand by around 300 basis points to 38%. Fourth-quarter adjusted profit beat expectations at US$2.77 per share, while net sales rose about 6% to US$2.27 billion.

Wells Fargo & Company (WFC) +1.28%

Wells Fargo shares rose after CFO Mike Santomassimo said net interest income should show a “step up” in the current quarter, reinforcing confidence in the bank’s full-year target of about US$50 billion. The guidance comes as investors assess whether lenders can sustain interest income growth while expectations for Federal Reserve rate cuts fade. Analysts expect second-quarter net interest income to rise about 5.6% to US$12.36 billion, following a 5% increase to US$12.1 billion in the first quarter. Santomassimo said loan growth was performing well and could exceed internal assumptions, while consumers remained resilient. Wells Fargo also continues to expand investment banking, targeting gains in equity capital markets and advisory.

 Click here for the daily moves of shares, indices and currencies.