Nvidia Expands South Korean AI Partnerships Across Chips, Cloud and Data Centres

Market Performance

South African Market Summary

South African equities ended weaker on Friday, with the JSE All Share index falling 1.05% to 111,275.44 points and the Top 40 declining 1.15% to 103,419.54 points. Retailers were in focus after contrasting updates from TFG and Mr Price. TFG fell under pressure after reporting a 33.5% decline in full-year HEPS to 675.4 cents, with weaker peak-season sales, excess inventory, margin pressure and impairments in the UK and Australia weighing on profitability. The group plans deeper cost cuts, slower store expansion and closures of underperforming assets. By contrast, Mr Price shares surged almost 15% as investors welcomed a steady dividend, stronger gross margin and reduced concerns over the NKD acquisition, despite modest earnings growth.

European Market Summary

European equities ended the week weaker as Middle East uncertainty, renewed inflation concerns and a pause in technology momentum weighed on risk appetite. The STOXX 600 fell 0.3% on Friday to 622.66 points, taking its weekly decline to 0.5%, as investors reassessed the outlook after a strong two-month rally in technology shares. Eurozone inflation accelerated in May, leading markets to price in a 25-basis-point ECB rate hike next week. Policy focus also turned to the European Commission’s proposed Cloud and AI Development Act and Chips Act 2.0, aimed at reducing reliance on US technology providers. In the UK, Halifax reported a third consecutive monthly fall in house prices, while hiring conditions deteriorated sharply in May.

US Market Summary

Wall Street’s nine-week winning streak ended sharply on Friday as stronger-than-expected labour market data triggered renewed concerns over a more hawkish Federal Reserve. The US economy added 172,000 jobs in May, more than double expectations, while unemployment held at 4.3%, reinforcing confidence in economic resilience but reducing the likelihood of near-term rate cuts. Selling was concentrated in technology and semiconductor stocks, with the Nasdaq suffering its largest one-day percentage decline since April 2025 and the Philadelphia Semiconductor Index recording its steepest fall since March 2020. The sell-off erased more than US$1 trillion in chip-sector market value. Markets are now pricing in a 42.7% probability of a December Fed rate hike.

Asian Market Summary

Asian markets started the week under pressure as technology shares extended their sell-off, reflecting weaker sentiment towards global AI-linked stocks after the Nasdaq declined more than 4.5% last week. In Japan, revised GDP data showed the economy lost momentum in the January-to-March quarter, weighed down by sluggish capital expenditure and rising uncertainty linked to the Middle East conflict. However, economists expect the broader economy to remain resilient, with limited impact on private consumption and corporate investment. In China, regulators moved to reassure investors that a crackdown on illegal cross-border securities trading would not trigger forced offshore account closures or asset liquidations. In South Korea, Han Seongsook was nominated as prime minister, potentially becoming the first woman in the role in 20 years.

Currency Market Summary

The rand weakened on Friday as investors assessed a decline in South Africa’s foreign reserves, while cautious sentiment around US-Iran peace talks kept inflation and risk premiums in focus. Globally, the dollar held near a two-month high on Monday after a stronger-than-expected US jobs report prompted traders to increase bets on a Federal Reserve rate hike later this year. Nonfarm payrolls rose by 172,000 in May, well ahead of expectations, reinforcing the view that US rates may remain higher for longer. The stronger dollar added further pressure to the yen, which traded at 160.29 per dollar and moved deeper into potential intervention territory, erasing gains made after Japan’s recent 11.7 trillion yen currency intervention.

Commodity Market Summary

Gold extended losses on Monday as stronger-than-expected US jobs data raised concerns that the Federal Reserve could shift towards a more hawkish policy stance, reducing the appeal of non-yielding assets. Oil prices moved more than US$2 a barrel higher after renewed Israeli strikes on Lebanon weakened hopes for a broader Middle East de-escalation and delayed expectations of restored crude flows through the Strait of Hormuz. Iran’s retaliation against Israel further heightened supply-risk concerns, while US efforts to prevent additional escalation remained in focus. OPEC+ approved a fourth consecutive monthly output increase, but analysts expect limited market impact, as several producers remain constrained by the Hormuz disruption, infrastructure damage and reduced production capacity.

Domestic Company News

Mr Price Group Limited (MRP) +14.67%

Mr Price delivered a resilient FY2026 performance, with total revenue rising 4.2% to R42.7 billion and retail sales increasing 4.3% to R41.1 billion, ahead of Retailers’ Liaison Committee growth of 4.0%. Normalised diluted headline earnings per share increased 8.0%, while statutory diluted HEPS rose 2.4% to 1 411.8 cents, impacted by once-off NKD acquisition costs. Gross profit margin expanded 70 basis points to 41.2%, despite a promotional retail environment, while operating profit exceeded R6.0 billion for the first time. Comparable store sales rose 1.1%, supported by 196 new store openings and continued cash sales strength. A final dividend of 592.8 cents per share was declared. Management remains cautious on inflation, rates and consumer pressure.

Foschini Group Limited (TFG) +3.93%

The Foschini Group reported a weaker FY2026 earnings performance despite higher sales, as margin pressure, impairments and acquisition effects weighed on profitability. Group revenue increased 7.2%, while retail sales rose 7.1%, although growth was limited to 2.8% excluding White Stuff. Online sales remained a key growth driver, increasing 31.7% and contributing 14.8% of total retail sales. In South Africa, TFG gained market share, with womenswear up 50 basis points and homeware and furniture up 40 basis points, according to the Retail Liaison Committee. However, gross margin contracted 120 basis points and operating profit before brand impairments and acquisition costs declined 22.1%. HEPS fell 33.5% to 675.4 cents, while the final dividend decreased 39.1% to 140.0 cents per share.

Global Company News

Nvidia Corporation (NVDA) -6.20%

Nvidia announced several South Korean partnerships aimed at strengthening its AI supply chain and expanding demand for its technology across data centres, robotics and cloud infrastructure. SK Hynix signed a multi-year agreement to develop advanced memory chips for global AI data centres, reinforcing Nvidia’s access to critical components as demand for AI computing accelerates. SK Telecom plans to build a gigawatt-scale AI cloud in South Korea using Nvidia technology, with its first AI data centre expected in 2027, while Naver, Doosan and LG Group will also collaborate on AI infrastructure, robotics and data-centre design. Although South Korean chip shares fell amid a broader global tech sell-off, CEO Jensen Huang remained upbeat on AI’s long-term growth outlook.

Banco BPM SpA (BAMI) -0.71%

Banco BPM said it will invite Banca Monte dei Paschi di Siena to discuss a potential merger of equals, positioning MPS at the centre of renewed Italian banking consolidation. MPS, bailed out by the state in 2017 and reprivatised in 2023–24, has already reshaped the sector after acquiring Mediobanca, becoming Generali’s largest shareholder. Banco BPM estimates a combined group would have a market value of about €50 billion, with earnings per share accretion above 10% and annual pre-tax benefits exceeding €1.1 billion. The proposal was unanimously approved by Banco BPM’s board, including representatives of key shareholder Credit Agricole. Intesa Sanpaolo