Morgan Stanley Beats Earnings Forecasts on Strong Trading and Wealth Management

Market Commentary

 South African Market Summary

South African equities closed lower on Wednesday, with the JSE All Share Index declining 0.82% to 108,515.44 points and the Top 40 shedding 0.85% to 100,698.08. Domestic economic activity weakened in September as the PayInc Economic Activity Index contracted 0.4% month on month, reversing August’s 1.2% increase, although annual growth remained positive at 1.8%. Meanwhile, Moody’s Ratings indicated that continued fiscal improvements could support South Africa’s first credit-rating upgrade from the agency since 2009. The country currently holds a Ba2 rating with a positive outlook, reflecting progress in debt stabilisation and structural reforms. Separately, South Africa joined Germany, Brazil, Spain and Japan in supporting an international initiative addressing inequality, with proposals expected to reach the United Nations in 2027.

European Market Summary

European equities posted modest gains on Wednesday, supported by stronger-than-expected earnings from ASML and renewed strength in healthcare stocks. The pan-European STOXX 600 advanced 0.43% to 637.75 points, while the healthcare sector gained 2.3%, reaching its highest level since 7 September. ASML’s results helped reassure investors about underlying AI demand despite concerns over technology valuations and financing costs. Meanwhile, European Central Bank President Christine Lagarde warned that elevated energy prices stemming from the Iran conflict continued to influence eurozone inflation, although broader second-round effects remained limited. Lagarde also stressed that France must address its fiscal challenges through domestic measures rather than ECB intervention. Investors continued to anticipate unchanged interest rates in October, while persistent energy costs and wage pressures maintained the possibility of further monetary tightening.

 US Market Summary

Wall Street closed lower on Wednesday as stronger-than-expected September inflation increased expectations of further Federal Reserve tightening, weighing heavily on technology shares. Oracle declined 8.8%, CoreWeave fell 15% and Nebius lost 10%, reflecting concerns over rising financing costs for AI infrastructure. Dell and Hewlett Packard Enterprise dropped 11.4% and 8.2%, respectively, following Barclays downgrades, while the Philadelphia Semiconductor Index declined 4.3%. Apple gained 0.5%, lifting its market capitalisation above $5 trillion for the first time. US gasoline prices surged 9.1% monthly and approximately 34% annually, intensifying inflation pressures. Markets assigned a 37% probability of an October rate increase, up from 22% previously. Bank of America declined 4.8%, while Morgan Stanley lost almost 3% despite stronger quarterly earnings.

Asian Market Summary

Asian equity markets opened lower on Thursday as stronger-than-expected US inflation increased expectations of further Federal Reserve tightening, weighing on investor sentiment. The International Monetary Fund warned that regional economic growth could moderate in 2027, citing risks from the Iran-related energy shock, a potential correction in AI valuations and rising global bond yields. Australian employment unexpectedly declined in September, while unemployment remained at a five-year high of 4.7%, reducing expectations of further monetary tightening. Markets now assign a nearly 90% probability that the Reserve Bank of Australia will maintain rates at 4.6% in November, up from 66% previously. Meanwhile, Taiwan Semiconductor Manufacturing Company is expected to report record quarterly earnings, supported by sustained demand for advanced AI chips and packaging technology.

Currency Market Summary

The South African rand weakened sharply on Wednesday after stronger-than-expected US inflation increased expectations of a Federal Reserve interest-rate hike in October. US headline inflation accelerated to 3.7% in September, exceeding forecasts of 3.6%, while core inflation reached 2.6% annually, above expectations of 2.5%. Monthly core prices increased 0.3%, against forecasts of 0.2%, pushing market-implied expectations of an October rate hike to 50% and briefly lifting the dollar to an 18-month high. However, the greenback retreated on Thursday as cautious Federal Reserve commentary and declining Treasury yields reduced expectations of immediate tightening. The dollar index slipped 0.1% to 102.06, surrendering most of its post-inflation gains. Currency markets remained sensitive to shifting US monetary policy expectations and interest-rate differentials.

Commodity Market Summary

Gold advanced more than 1% on Thursday, recovering from a one-week low as the US dollar weakened and investors reassessed expectations of an October Federal Reserve rate increase following stronger-than-expected inflation. Meanwhile, oil prices declined more than $1 per barrel as markets weighed escalating supply disruptions around the Strait of Hormuz against potential US sanctions relief for previously restricted oil tankers. Attacks on commercial vessels intensified, with two ships sinking near the strategic waterway, while Washington considered easing restrictions to reduce elevated shipping costs. Increased production from Russia and recovering Middle Eastern exports also moderated oil prices. US crude inventories reportedly declined by 11.1 million barrels, significantly exceeding expectations, ahead of official Energy Information Administration data scheduled for Thursday.

Domestic Company News 

Foschini Group Limited (TFG) -2.64%

The Foschini Group has notified shareholders that PSG Asset Management has increased its holding in the company to 5.03% of its total issued ordinary share capital. The disclosure follows formal notification received from PSG and is made in accordance with section 122(3)(b) of the Companies Act and paragraph 6.54 of the JSE Listings Requirements. TFG’s board of directors has accepted responsibility for the information contained in the announcement insofar as it relates to the company, confirming that, to the best of its knowledge, the disclosed information is accurate and complete. The company has also submitted the required notices to the Takeover Regulation Panel under section 122(3)(a) of the Companies Act. The announcement does not disclose PSG’s previous shareholding percentage or the number of shares acquired.

Sibanye-Stillwater Limited (SSW) -3.99%

Sibanye-Stillwater has notified shareholders that UBS Group AG has acquired an aggregate beneficial interest representing 5.02% of the company’s total issued ordinary shares. The disclosure, dated 14 October 2026, follows formal notification received from UBS and complies with section 122(3)(b) of the Companies Act, Regulation 121(2)(b) of the Companies Act Regulations and paragraph 6.54 of the JSE Listings Requirements. Sibanye-Stillwater has submitted the required notice to the Takeover Regulation Panel, while its board has accepted responsibility for the accuracy and completeness of the announcement based on documentation received from UBS. The announcement does not disclose UBS’s previous shareholding or the transaction value.

Vunani Limited (VUN) 0.00%

Vunani expects a substantial improvement in earnings for the six months ended 31 August 2026, according to its latest trading statement. Basic earnings per share are projected to range between 17.0 cents and 18.9 cents, representing an increase of 79% to 99% compared with 9.5 cents in the corresponding period last year. Headline earnings per share are expected to reach between 14.4 cents and 16.3 cents, reflecting growth of 52% to 72% from the previous 9.5 cents. The anticipated improvement exceeds the 20% threshold requiring disclosure under the JSE Listings Requirements. Vunani is finalising its interim financial results, which are scheduled for publication on SENS on or about 21 October 2026. The financial information underpinning the trading statement remains unaudited and has not been independently reviewed.

Global Company News

Bank of America Corporation (BAC) -4.76%

Bank of America reported weaker-than-expected third-quarter earnings, with net profit declining to $6.9 billion, or $0.91 per share, from $8.3 billion a year earlier. Excluding a $1.2 billion regulatory penalty related to anti-money-laundering failures, earnings reached $1.08 per share, below expectations of $1.10. Sales and trading revenue declined 5% to $5.1 billion, while investment banking fees fell 11% to $1.8 billion. Unrealised losses on the bank’s bond portfolio increased to $109 billion from $85 billion in June, reflecting rising yields. However, net interest income increased 8%, supported by higher loan and deposit balances. Shares declined more than 8%, reaching their lowest level since May, as investors assessed earnings weakness, regulatory costs and broader concerns about the bank’s trading performance.

Morgan Stanley (MS) −2.75%

Morgan Stanley exceeded third-quarter earnings expectations, reporting net profit of $4.91 billion, or $3.03 per share, against forecasts of $2.91. Revenue increased to $20.34 billion from $18.22 billion, supported by strong equities trading and investment banking activity. Equities trading revenue surged nearly 41% to $5.8 billion as market volatility boosted transaction volumes, while fixed-income trading revenue declined 7.3% to $2.01 billion. Investment banking revenue increased 2% to $2.16 billion, supported by advisory and merger activity. Wealth management revenue rose 10.1% to $9.07 billion, with record net new assets of $232 billion. However, investment management revenue declined to $1.46 billion, while elevated withdrawal requests persisted in its private credit fund. Shares fell 2.5% in pre-market trading despite the earnings beat.

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