Evening digest: Volkswagen announces job cuts, Nvidia acquires Hugging Face

On Thursday, Volkswagen announced plans to cut another 50,000 jobs as part of a broader restructuring, while Nvidia announced a $12.9 billion acquisition of Hugging Face.

Gold prices climbed more than 2% as traders reduced expectations for a September Federal Reserve rate hike, while oil prices extended gains amid renewed concerns over Middle East supply disruptions.

Volkswagen plans 50,000 more job cuts

Volkswagen AG plans to cut an additional 50,000 jobs and reduce its product lineup as part of a sweeping restructuring aimed at improving efficiency and competitiveness.

The company said its supervisory board unanimously approved the Future Plan at a meeting in Wolfsburg.

The approval gives Chief Executive Officer Oliver Blume a stronger mandate to push forward with the overhaul after months of resistance.

The latest job cuts would bring Volkswagen’s expected total workforce reduction to 100,000. The company also plans to streamline its model lineup by about 50% by 2035 and slim its holdings.

Volkswagen is undertaking the changes as it faces high costs, weaker demand and intensifying competition.

Management and the supervisory board said the restructuring is necessary to improve the automaker’s long-term competitiveness.

Nvidia buys Hugging Face for $12.9 Billion

Nvidia announced that it had agreed to acquire open-source artificial intelligence platform Hugging Face for $12.9 billion.

The deal, which had been reported last week, represents Nvidia’s second-largest acquisition on record.

Hugging Face provides tools and infrastructure used by developers and institutions to build, share and deploy AI models.

Nvidia said the platform will remain open to the broader AI ecosystem following the transaction.

The acquisition expands Nvidia’s presence beyond the hardware used to power AI workloads and adds a widely used AI development platform to its portfolio.

Nvidia’s largest acquisition remains its $20 billion purchase of assets from chipmaker Groq in December. Before that transaction, the company’s biggest acquisition was its nearly $7 billion purchase of Israeli chipmaker Mellanox in 2019.

Gold climbs as Fed Rate hike bets ease

Gold prices rose sharply on Thursday as traders scaled back expectations for a September interest rate hike after Federal Reserve Governor Christopher Waller indicated support for keeping rates unchanged if inflation pressures continue to moderate.

Spot gold rose 2.08% to $4,477.36, after reaching its highest level since Aug. 28 earlier in the session.

US gold futures settled 2.5% higher at $4,525.40.

Traders saw about a 54% chance of a rate hike at the Federal Reserve’s Sept. 15-16 meeting, down from around 62% before Waller’s comments.

Lower Treasury yields also supported gold by reducing the opportunity cost of holding the non-yielding asset. A weaker US dollar provided additional support by making dollar-priced bullion more affordable for overseas buyers.

Investors are now awaiting Friday’s US nonfarm payrolls report, followed by August consumer and producer price inflation data next week.

Oil extends gains on Middle East risks

Oil prices rose for a fourth consecutive day on Thursday as US strikes on Iran and renewed Israeli threats against Tehran increased concerns about disruptions to Middle East supplies.

Brent crude futures were up 15 cents, or 0.16%, at $95.78 a barrel by 1 p.m. ET, while US West Texas Intermediate crude futures rose 63 cents, or 0.69%, to $91.64. Both contracts had reached six-week highs earlier in the session.

The latest attacks marked the most substantial exchange of fire between the United States and Iran since July. The conflict, which began with US-Israeli strikes at the end of February, is now in its seventh month.

Shipping through the Strait of Hormuz also weakened. Six commodity vessels transited the strait on Wednesday, down from 11 a day earlier and below the 10-day average of around 13.

Iran has also added ships to a list of vessels it considers non-compliant and subject to potential fines, confiscation or detention if they attempt to pass through the strait.

Higher oil prices and concerns over their inflation impact have contributed to increased expectations for a Federal Reserve rate hike this month.