OpenAI lands $200m Pentagon deal as revenue hits $10bn and user base surges to 500m

Local Market Commentary

South African markets were closed for a public holiday, but on Friday, the JSE All Share Index and the Top 40 closed down 1.76% and 1.64% respectively, ending at 95,324.3 and 87,656.9 points. Recent data reveals a concerning trend: international investors have withdrawn $3.7 billion from local equities since October—the most prolonged stretch of outflows in five years. This marks a sharp uptick from the combined $1.9 billion withdrawn in 2023 and 2024, highlighting waning global confidence in South Africa’s equity market. Despite a temporary spike in foreign purchases last week, significant net selling suggests that international appetite for South African risk assets remains limited.

 European Market Commentary

European equities posted modest gains, rebounding from a week-long downturn as investor sentiment steadied and corporate news dominated headlines. The STOXX 600 rose 0.4%, led by banking stocks and a surge in Kering shares following its CEO reshuffle. However, Renault tumbled after reports of a planned stake reduction by Nissan. Geopolitical tensions eased slightly, though EU officials dismissed speculation around accepting broad U.S. tariffs, reaffirming the bloc’s negotiation stance.

 U.S. Market Commentary

U.S. markets closed higher as easing oil prices calmed fears of inflationary pressure stemming from Middle East tensions. Investors are now squarely focused on the Fed’s upcoming policy decision, with expectations firmly anchored around a rate hold until at least September. Meanwhile, fresh data on retail sales and inflation indicators are due this week. Notably, Donald Trump disclosed over $600 million in income from diverse ventures, lifting the curtain on his expansive asset base now estimated at over $1.6 billion.

 Asia Market Commentary

Asia-Pacific equities advanced on signs that tensions between Iran and Israel may de-escalate, while regional macro data painted a mixed picture. India’s trade deficit narrowed more than expected in May, while South Korea announced a second fiscal stimulus package to support domestic demand. In China, industrial production slowed while retail sales improved, underscoring uneven recovery trends. The prolonged property downturn continues to weigh heavily, with May's new home prices slipping further despite ongoing policy support.

Commodity Market Commentary

Heightened geopolitical tensions between Israel and Iran have driven gold prices higher as investors seek safe havens amid growing uncertainty, further intensified by U.S. President Donald Trump’s call for the evacuation of Tehran. While oil prices initially fell on hopes of de-escalation, concerns resurged due to ongoing hostilities, including missile attacks and air defence activity in Tehran and Israel, raising fears of supply disruptions from Iran, the third-largest OPEC producer. These developments pose significant risks to Middle Eastern oil exports, with added volatility from reports of shipping incidents in the Gulf of Oman.

Currency Market Commentary

The U.S. dollar traded marginally stronger in early Tuesday dealings, underpinned by investor caution ahead of key central bank decisions and ongoing geopolitical unrest. The yen showed a modest rebound as traders awaited the Bank of Japan’s policy announcement, with expectations leaning toward an unchanged interest rate but possible adjustments to its bond-buying programme. Sterling remained range-bound against the greenback, reflecting a broader risk-averse stance among traders before the Bank of England’s rate decision later this week.

Novus Holdings Limited (NVS) +0.65%

Novus Holdings delivered a 6.6% rise in revenue to R4.22 billion for the year ended 31 March 2025, with EBITDA up to R663.4 million. Operating profit was stable at R394.4 million, while earnings per share climbed to 110.9 cents and headline EPS to 88.3 cents. Diluted headline EPS improved to 80.2 cents. The Group declared a 55 cents dividend (2024: 50 cents), and net asset value increased to 703.5 cents per share. However, closing cash declined to R812.2 million from R871.4 million.

 Vunani Limited (VUN) 0.00%

Vunani expects to report a basic loss per share of between 6.2 and 8.0 cents and a headline loss of 2.0 to 3.5 cents for FY25, marking a reversal from FY24 earnings of 9.0 and 7.4 cents respectively. This signals a year of substantial decline in profitability, with final results due on or about 20 June 2025.

SoftBank Group Corporation (9984) +2.50%

SoftBank sold 21.5 million T-Mobile shares at approximately $224 each, raising $4.8 billion at a roughly 3% discount to the prior closing price, while retaining its position as T-Mobile’s second-largest shareholder behind Deutsche Telekom. Prior to the sale, SoftBank held a 7.52% stake valued at around $22.76 billion. This follows a 2023 agreement linked to the Sprint-T-Mobile merger, under which SoftBank received additional T-Mobile shares worth $7.59 billion at no extra cost.

OpenAI (Not Listed)

OpenAI secured a $200 million contract from the U.S. Department of Defense to develop advanced AI prototypes addressing critical national security challenges, with work slated to conclude by July 2026. The company’s annualised revenue run rate has surged to $10 billion amid rapid AI adoption. Earlier in 2025, OpenAI announced plans to raise up to $40 billion in funding at a $300 billion valuation, led by SoftBank Group. OpenAI now counts 500 million weekly active users and operates within a federal policy framework prioritising a competitive U.S. AI market, with national security applications exempted from certain regulations.

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