Nvidia to Acquire Hugging Face for $12.9 Billion

Market Commentary

South African Market Summary

South African equities advanced strongly on Thursday, with the JSE All Share Index gaining 1.40% to 116,687.82 points and the Top 40 rising 1.44% to 109,277.18. Domestic economic data showed a modest improvement in private-sector conditions, with the S&P Global South Africa PMI increasing to 50.5 in August from 50.3 in July, remaining just above the threshold separating expansion from contraction. Higher new orders supported output and purchasing activity. Meanwhile, South African Reserve Bank Governor Lesetja Kganyago said policymakers could respond cautiously to inflation shocks stemming from higher oil prices linked to the Iran conflict and the risk of drought. The SARB kept its benchmark policy rate unchanged at 7.0% in July following a 25-basis-point increase at its previous meeting.

European Market Summary

European equities rebounded on Thursday after three consecutive declines, with the STOXX 600 rising 0.5% to 649.1 as pressure from the global bond selloff eased. Eurozone services growth slowed to a two-month low in August, although broader private-sector activity remained steady, while markets continued to price an ECB rate increase to 2.5% next week. Germany’s Ifo institute raised its 2026 GDP growth forecast to 1.4% from 0.8%, citing stronger fiscal spending, industrial orders and export demand. UK services activity also strengthened, with the PMI rising to 52.5 from 52.1 in July, although higher reported prices remained a concern for the Bank of England. Soitec surged 10.3% after raising its second-quarter 2027 revenue growth outlook to 50%.

US Market Summary

Wall Street rallied on Thursday as investors reduced expectations for a September Federal Reserve rate increase following Governor Christopher Waller’s indication that he could support unchanged rates if inflation continues to ease. All three major indices gained at least 1%, with the Nasdaq supported by strength across megacap technology stocks. CME FedWatch data showed the probability of a September hike falling to 50.4% from 63.2% a day earlier, while the benchmark Treasury yield declined for a second session. Economic data remained mixed, with low jobless claims and stronger services activity offset by elevated input prices and a 24.4% wider trade deficit. Attention now turns to August payrolls, with 56,000 jobs expected and unemployment forecast to remain at 4.1%. Nvidia gained 1.80% after announcing its Hugging Face acquisition.

Asian Market Summary

Asian equities advanced on Friday as investors followed a broader global rally ahead of crucial US employment data. In Japan, household spending fell 3.6% year on year in July, significantly worse than the 1.6% decline expected and marking an eighth consecutive monthly contraction, reinforcing concerns over weak consumption before the Bank of Japan’s September meeting. South Korean President Lee Jae Myung will visit France from September 6–9 for talks with President Emmanuel Macron and a joint film-industry summit. In China, S&P Global Ratings warned that generous domestic credit assessments may be introducing additional risk into the country’s rapidly expanding bond market, particularly where foreign issuers receive substantially stronger local ratings than their global assessments. Regional sentiment nevertheless remained supported by the wider risk-on backdrop.

Currency Market Summary

The South African rand firmed modestly on Thursday as a weaker dollar and stronger gold prices provided support ahead of key US labour-market data. Currency markets remained focused on nonfarm payrolls and next week’s inflation figures for signals on the Federal Reserve’s September 15–16 policy decision. The dollar index held near 99.01 and was heading for a 0.7% weekly decline, while the euro traded around $1.1625 and sterling at $1.3527. The Japanese yen was on course for a 2.5% weekly gain, its strongest performance since late July, as markets increased expectations of a Bank of Japan rate hike at its September 17–18 meeting. Fed Governor Christopher Waller indicated that steady rates remained possible if forthcoming inflation data confirmed easing price pressures.

Commodity Market Summary

Gold was steady on Friday and remained on course for a modest weekly gain as investors awaited US nonfarm payrolls for fresh guidance on the Federal Reserve’s September interest-rate decision. Oil prices climbed and were heading for their strongest weekly advance since mid-July as renewed US-Iran hostilities heightened concerns over Middle East supply disruptions, particularly around the Strait of Hormuz. The conflict, now in its seventh month, intensified after further military strikes and renewed threats against Iranian energy infrastructure, although optimism over a potential Ukraine peace settlement tempered some of the upside. Markets are balancing escalating geopolitical risk against expectations for stronger Iraqi oil exports, while today’s US labour-market data is likely to shape both dollar sentiment and commodity price direction into next week.

Domestic Company News 

Santam Limited (SNT) -2.62%
Santam delivered a solid first half, with group insurance revenue rising 2% to R27.96 billion and HEPS increasing 7% to 2,006 cents. Conventional insurance net earned premiums grew 6% to R18.9 billion, although the underwriting margin moderated to 8.1% from 11.3% as weather-related catastrophes and other large losses surged to R1.5 billion from R144 million. Alternative Risk Transfer profit before tax increased 12% to R466 million, while annualised return on shareholders’ funds reached 27.0%. International expansion progressed through the London syndicate and India office, with the syndicate securing R1.3 billion in expected gross written premiums. Santam maintained a 167% economic capital coverage ratio and raised its interim dividend by 10.2% to 650 cents per share.

Discovery Limited (DSY) +2.86%
Discovery delivered strong FY2026 growth, with normalised operating profit rising 17% to R17.75 billion and normalised headline earnings increasing 21% to R11.80 billion. Headline earnings advanced 34% to R12.92 billion, while profit attributable to ordinary shareholders climbed 39% to R13.13 billion. Normalised ROE improved to 16.5%, supported by lower finance costs as financial leverage declined to 15.4%. Discovery South Africa grew normalised operating profit by 16%, while Vitality increased profit by 21% despite currency headwinds. New business annualised premium income rose 6% to R28.16 billion and embedded value increased 13% to R142.92 billion. Cash conversion strengthened to 85%, while the final dividend increased 36% to 273 cents per share as Discovery advances its super bank and global Vitality strategies. 

Impala Platinum Holdings Limited (IMP) +9.04%
Implats delivered a materially stronger FY2026 performance, supported by improved production and significantly higher PGM pricing. Group 6E production was stable at 3.50Moz, while refined and saleable production increased 5% to 3.56Moz. Rand revenue per 6E ounce rose 51% to R38,116, lifting EBITDA to R43.6 billion and headline earnings to R22.9 billion, or 2,548 cents per share. Basic earnings reached R31.0 billion, while free cash flow totalled R22.0 billion and adjusted net cash closed at R22.0 billion. Unit costs increased 8% to R24,249/oz and capital expenditure rose 3% to R7.2 billion. Implats declared final and additional dividends totalling 1,445 cents per share, taking FY2026 distributions to 1,855 cents, equivalent to approximately 82% of adjusted free cash flow.

Fortress Real Estate Investments Limited (FFB) +5.26%
Fortress delivered stronger FY2026 earnings, with distributable earnings increasing 14.2% to R2.23 billion, ahead of guidance, supported by resilient portfolio growth and capital recycling. Like-for-like NOI grew 6.8% overall, including 7.3% in South African retail and 8.4% in logistics, while local portfolio values increased 6.4%. Revenue from direct property operations rose 5.3% to R5.07 billion and SA REIT NAV per share increased 9.2% to R27.46. The loan-to-value ratio improved to 34.0% from 39.1%, while funds from operations advanced 12.6%. Fortress raised R1.35 billion in equity to support its development pipeline. The FY2026 dividend increased 10.1% to 178.80 cents per share, while FY2027 distributable earnings guidance was raised to R2.46 billion.

Global Company News

Nvidia Corporation (NVDA) +1.80%
Nvidia has agreed to acquire AI developer platform Hugging Face for $12.93 billion, expanding its reach into the fast-growing open-source artificial intelligence ecosystem. The transaction will bring Nvidia closer to developers using Hugging Face’s models, datasets, software libraries and cloud services, potentially strengthening demand for its processors and computing platforms. Nvidia will pay approximately $11.9 billion to investors and provide up to $1 billion through an equity-based employee retention programme. Hugging Face, valued at $4.5 billion in its 2023 funding round, will remain an open platform, allowing developers to choose models, chips and cloud providers. The acquisition comes as major Nvidia customers increasingly develop proprietary AI chips, while the company deploys its substantial cash resources to broaden its customer base and strategic influence.

Lululemon Athletica Inc. (LULU) +1.42%
Lululemon cut its FY2026 outlook again after second-quarter revenue of $2.42 billion missed the $2.46 billion analyst consensus, sending its shares about 18% lower in extended trading. The retailer now expects annual revenue to decline 5%–7%, versus previous guidance ranging from flat to a 1% decline, while EPS guidance was reduced to $9.48–$9.73 from $10.95–$11.15. Americas revenue fell 8% and China revenue declined 2% in constant currency, reversing strong prior-year growth. Leggings sales dropped approximately 20% as newer competitors continued gaining share. Incoming CEO Heidi O’Neill faces pressure to restore product relevance and marketing effectiveness. Quarterly gross margin nevertheless improved 200 basis points to 60.5%, supported by $134.5 million in tariff refunds.

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