Adobe lifts 2025 outlook on strong design software demand and AI monetisation

South Africa

The Top 40 index added 0.30% yesterday to reach 96,529.3 points, while the All Share index posted a 0.33% gain to close at 103,927.4 points. South Africa's current account deficit widened to 1.1% of GDP in Q2 2025 (R82.8bn), from 0.6% in Q1, as export values declined more than imports. The trade surplus narrowed to R177.1bn, down from R211.0bn. July data showed mining output up 4.4%, ahead of forecasts, while manufacturing fell 0.7%. On the corporate front, FirstRand reported a 10% earnings increase despite a further UK provision, while Discovery posted 30% profit growth, underscoring resilience in financial services despite weak macro fundamentals.

Europe

European equities advanced, with the STOXX 600 up 0.5% as defence stocks surged following geopolitical tensions in Eastern Europe. The sector index rose 2.5% to a record high after Poland intercepted a suspected Russian drone. The ECB left rates unchanged, in line with expectations, maintaining a data-dependent stance. Inflation forecasts were trimmed to 1.9% for 2027, below the 2% target. France's economy is now forecast to grow marginally faster in 2025, supported by rebounds in aeronautics, tourism, agriculture, and real estate despite subdued consumption and investment.

United States

Wall Street closed at record highs, driven by gains in Tesla and Micron. US inflation surprised to the upside in August, but labour market weakness kept expectations firm for a 25bps Fed rate cut on 17 September. Jobless claims reached 263,000, near four-year highs, while downward revisions highlighted softer employment growth. Micron rose 7.5% after a price target upgrade, while Warner Bros Discovery rallied 29% on reports of a Paramount Skydance takeover bid. Economists now anticipate multiple rate cuts as growth risks outweigh inflation pressures.

Asia

Asian equities tracked Wall Street higher, with Japan, South Korea, and Taiwan indices reaching record levels on optimism around AI-driven earnings. SK Hynix surged after announcing completion of HBM4 chip development, boosting confidence in AI hardware demand. Chinese tech majors also rallied, with Alibaba and Baidu climbing 6% and 10% respectively in Hong Kong as both accelerated deployment of in-house AI training chips, reducing reliance on Nvidia. Broader regional sentiment was supported by the prospect of lower US borrowing costs, easing pressure on bond markets.

Commodities

Gold prices extended gains, set for a fourth consecutive weekly increase as weak US labour data overshadowed inflation concerns ahead of an expected Fed rate cut. Oil prices softened, pressured by oversupply worries despite ongoing geopolitical risks. The IEA projected higher-than-expected global supply growth in 2025, while OPEC+ announced plans to raise output from October. Saudi crude shipments to China will rise to 1.65mbpd in October, while Russia will cut ESPO Blend exports to 4mt from Kozmino, signalling shifting supply dynamics in key Asian markets.

Currencies

The rand strengthened after softer US labour data reinforced Fed rate cut expectations, offsetting the impact of higher US inflation prints. The dollar index retreated to 97.6, set for a second consecutive weekly decline. Sterling weakened against the dollar as traders digested ECB policy signals and positioned ahead of next week's Fed and Bank of England meetings. Global FX markets remain focused on the Fed's September decision, with expectations of further cuts into Q4 as labour market softness outweighs near-term inflation risks.

FirstRand Limited (FSR) +6.38%

FirstRand delivered resilient results despite macroeconomic headwinds, supported by strong performances across its major franchises and disciplined capital allocation. Normalised earnings rose 10% to R41.8bn, with ROE at 20.2% and NIACC up 12% to R11.6bn. The group absorbed a R2.96bn pre-tax impact from the UK motor commission matter, yet maintained robust credit metrics, with a credit loss ratio of 85 bps. CET1 improved to 14.0%, underpinning a 12% dividend increase to 466c (1.6x cover). Growth was broad-based, led by WesBank, RMB, and Group Treasury.

Discovery Limited (DSY) -9.56%

Discovery delivered robust FY2025 results, with normalised operating profit up 29% to R15.2bn and cash conversion rising to 77%. Headline earnings grew 30% to c.R9.8bn, lifting ROE to 15.4% (FY2024: 13.5%). Embedded value increased to R126.6bn, delivering a 15.7% RoEV. South Africa generated 22% profit growth, led by strong contributions from Health, Life, Invest, Insure, and Discovery Bank, which reached profitability ahead of schedule. Vitality posted 70% profit growth, with notable gains at VitalityHealth and VitalityLife, and Ping An Health contributed strongly. Capital ratios remain solid, with debt reduced and liquidity buffers intact.

City Lodge Hotels Limited (CLH) 0.00%

City Lodge reported modest revenue growth in FY2025 despite geopolitical pressures reducing occupancy to 56% (FY2024: 58%) and refurbishment-related room closures. Total revenue rose 3% to R2.0bn, supported by a 7% increase in average room rates and 8% growth in food and beverage revenue, now 20% of group turnover. EBITDAR grew 12% to R641.5m, with margin expanding to 32.1%. PAT increased 12.9% to R213m, with diluted EPS up 15.4%. Adjusted diluted HEPS rose 9% to 34.6c, underpinned by a strong second-half recovery.

Lesaka Technologies Inc. (LSK) -6.87%

Lesaka delivered strong top-line growth in FY2025, with net revenue up 38% to $328.7m (R5.3bn) and adjusted EBITDA up 33% to $50.7m (R922m), in line with guidance. Adjusted earnings rose sharply to $10.4m, or $0.13 per share. However, statutory results were weighed down by non-operating, non-cash items, including MobiKwik fair value adjustments, impairments, and transaction costs, leading to a widened net loss of $87.5m. Q4 performance was robust, with revenue up 47% and adjusted EBITDA up 61%, underscoring operational momentum despite headline losses.

Adobe Inc. (ADBE) +0.11%

Adobe raised its fiscal 2025 revenue and profit forecasts, highlighting resilient demand for its design software and monetisation of AI tools such as Firefly. The CFO emphasised user and subscriber growth as key drivers, though investors remain cautious given slowing share performance and intensifying competition from firms like Figma. Revenue is now projected at $23.65-$23.70bn, with adjusted EPS of $20.80-$20.85. Q4 guidance of $6.08-$6.13bn revenue and $5.35-$5.40 EPS aligns with consensus, following Q3 revenue of $5.99bn, ahead of estimates.

Kroger Company (KR) +0.30%

Kroger raised its annual sales outlook for the second consecutive time, supported by resilient demand for fresh produce and value-focused promotions. The retailer has cut prices on over 3,500 products this year, boosting identical sales (ex-fuel) by 3.4% in Q2, versus 2.84% expected. Full-year comparable sales growth is forecast at 2.7-3.4%, with EPS now guided at $4.70-$4.80. Q2 adjusted EPS reached $1.04, exceeding forecasts, aided by improved gross margins. Despite ongoing legal disputes with Albertsons, Kroger plans a 30% increase in store openings by 2026.

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