Novartis Beats Q2 Profit Expectations, Maintains 2026 Outlook

Market Commentary

South African Market Summary

South African equities ended marginally higher on Tuesday, with the JSE All Share adding 0.04% to 108,980.05 and the Top 40 rising 0.16% to 100,772.13. Attention now shifts to June consumer inflation on Wednesday and the South African Reserve Bank’s policy decision on Thursday. Economists expect annual CPI to accelerate to 4.7% from 4.5% in May and forecast a 25-basis-point increase in the repo rate to 7.25%. Corporate developments included Sasol reporting that FY2026 production and sales metrics met or exceeded guidance, while Tiger Brands expanded Transnova’s mandate across its national distribution network. Dis-Chem also announced Saul Saltzman’s resignation as a non-executive director, effective 17 July, following his earlier transition from an executive role. These events frame near-term domestic sentiment.

European Market Summary

European equities advanced on Tuesday as technology and mining gains outweighed renewed Middle East tensions and higher oil prices. The STOXX 600 rose 0.6% to 643.19, ending a two-session decline, while the technology sector gained 2.1%. ASMI and ASML climbed 5.4% and 4.7%, respectively. Attention now turns to Thursday’s European Central Bank meeting, where rates are expected to remain unchanged, although markets price at least one 25-basis-point increase by end-2026. German investor sentiment improved sharply in July, with the ZEW index rising to 26.3 from 10.5. However, eurozone banks tightened credit standards during the second quarter and anticipate further restraint, particularly for automotive and energy-intensive industries, despite stronger business loan demand and elevated rejection rates across the region’s banking system.

US Market Summary

Wall Street closed higher on Tuesday, led by the Nasdaq as a sharp rebound in semiconductor shares redirected attention from Middle East tensions and renewed tariff concerns. The Philadelphia Semiconductor Index surged 5.2%, extending its recovery after ending Friday more than 20% below its late-June record. Investors largely looked through President Donald Trump’s proposed 50% tariffs on a broad range of Canadian imports and oil’s 2% rise to five-week highs following renewed Red Sea shipping threats. Focus shifted towards upcoming results from Alphabet, Intel and Texas Instruments, which could shape technology-sector sentiment. Trading activity remained subdued, with 16.14 billion shares changing hands versus the 20-session average of 19.56 billion, indicating that the rally lacked broad participation across overall markets.

Asian Market Summary

Asian equities advanced at Wednesday’s open, following a rebound in United States markets despite higher oil prices and escalating Middle East risks. Japan’s June trade data highlighted pressure from the weak yen and elevated energy costs, with imports reaching a record high and intensifying inflation concerns. Exports rose 19.3% year on year, extending gains to a tenth consecutive month and exceeding the 18.6% increase expected by economists. The stronger trade performance contrasted with a swelling import bill that complicates the Bank of Japan’s policy outlook while authorities seek to protect a fragile recovery. In China, Nike tightened control over online distribution, directing shoppers towards official channels as it attempts to rebuild pricing discipline and counter market-share losses to domestic competitors.
Currency Market Summary

The South African rand strengthened in early Tuesday trade as investors assessed mixed developments in the United States-Iran conflict and softer oil prices following reports of mediation efforts. The currency’s advance reflected improved risk sentiment, although geopolitical uncertainty remained elevated as United States forces continued an eleventh consecutive night of strikes on Iran. Broader foreign-exchange markets remained dollar-supportive, with the greenback gaining overnight and briefly pushing the euro below $1.14. Rising United States Treasury yields and firm oil prices also kept the yen near a four-decade low, reinforcing the dollar’s broader strength. For South African investors, the rand’s resilience provided near-term support, but its performance remained closely tied to oil-price movements, global risk appetite and continuing developments in the conflict.

Commodity Market Summary

Gold advanced to a near two-week high on Wednesday as technical buying supported prices, while investors monitored the Middle East conflict and awaited next week’s US Federal Reserve meeting for interest-rate guidance. Oil edged higher after settling at a five-week peak on Tuesday, with supply concerns intensifying as US forces began an eleventh consecutive night of strikes on Iranian targets and Kuwait reported intercepting Iranian drones. Risks broadened after Yemen’s Iran-aligned Houthis threatened vessels carrying Saudi oil through the Bab el-Mandeb Strait and announced a naval blockade of Saudi Arabia. Meanwhile, American Petroleum Institute data indicated higher US crude and distillate inventories but lower gasoline stocks. Energy Information Administration figures were due later Wednesday, providing a signal for oil markets.

Domestic Company News

Kumba Iron Ore Limited (KIO) -5.06%
Kumba Iron Ore expects materially weaker interim earnings for the six months ended 30 June 2026, despite resilient operations through exceptionally heavy second-quarter rainfall. Production declined 3%, as solid Sishen output was offset by planned reductions at Kolomela, while sales volumes fell 1% following Transnet’s first planned 10-day maintenance shutdown in May. EBITDA is forecast at R10.433 billion to R11.194 billion, 30% to 35% below the comparative R15.991 billion. The decline largely reflects an 11% stronger rand, a marginally lower realised export iron ore price and the absence of a prior Transnet payment. HEPS is expected at R12.68 to R13.61, down 39% to 43%, while EPS is projected at R12.41 to R13.31, down 40% to 44%, underscoring substantial currency sensitivity.

Sasol (SOL) +0.24%
Sasol reported FY26 production and sales metrics within or above guidance, supported by stronger fourth-quarter operations and improved macroeconomic conditions. Secunda achieved its highest annual output in five years, aided by the destoning project, increased natural gas availability and stable operations, while liquid fuels sales rose year on year. International Chemicals adjusted EBITDA is expected to exceed the US$375 million to US$450 million guidance range, reflecting stronger pricing in America and margin protection in Eurasia. ORYX GTL remained offline, and year-end working capital exceeded guidance because of higher pricing and inventory build. Sasol also advanced renewable capacity beyond 500 MW, approved a €60 million specialty alumina investment and expects detailed FY26 results and FY27 guidance on 1 September 2026.

ASP Isotopes Inc. (ISO) +3.43%
ASP Isotopes Inc. has signed a research agreement through wholly owned subsidiary Quantum Leap Energy with the Texas A&M Engineering Experiment Station to advance uranium conversion technology. The programme will collect physicochemical data on converting uranium oxide concentrate into high-purity uranium hexafluoride, the feedstock required for enrichment, with the aim of improving efficiency, reducing costs and supporting commercial scale-up. The collaboration addresses a strategically important weakness in the United States nuclear fuel chain, where only one commercial conversion facility currently operates. Investor relevance centres on the potential to strengthen QLE’s engineering basis and domestic fuel-cycle positioning. However, the initiative remains research-stage, commercialisation is unproven, and future progress depends on successful scale-up, funding, regulatory approvals and execution across several development programmes.

Global Company News

Novartis AG (NOVN) +1.98%
Novartis delivered stronger-than-expected second-quarter profitability while retaining its 2026 outlook, although management cautioned that temporary benefits would unwind during the second half. Core operating profit reached $5.94 billion, exceeding the roughly $5.31 billion analyst consensus, while sales rose 1% at constant currencies to $14.41 billion. Growth was supported by Kisqali, up 44% to $1.7 billion, Scemblix, nearly doubling to $562 million, and Cosentyx, up 12% to $1.82 billion, including a $100 million inventory benefit. Entresto sales fell 50% to $1.18 billion amid US generic competition. Investors remain focused on three pivotal late-stage readouts. Novartis maintained guidance for low-single-digit sales growth and a low-single-digit decline in core operating profit, with higher research, launch and acquisition-related spending expected to pressure second-half earnings.

Charles Schwab Corporation (SCHW) -2.52%
Charles Schwab reported record second-quarter profit as heightened market volatility supported trading activity, client acquisition and asset inflows. Net income rose to $2.8 billion, or $1.54 per share, from $2.13 billion, or $1.08 per share, a year earlier. Daily average trading volume increased 57% to a record 11.9 million, driving a 28% rise in trading revenue. The platform added 1.4 million brokerage accounts and attracted $119.8 billion of core net new assets during the quarter. Asset management and administration fees advanced 16.2% to $1.83 billion, reflecting higher balances across mutual funds and exchange-traded funds. The results demonstrate broad earnings momentum across Schwab’s brokerage, wealth management, banking, custody and advisory operations despite volatile geopolitical and market conditions during the reporting period.

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