The emergence of Chinese artificial intelligence startup DeepSeek cast a dark shadow on Wall Street, sending AI doyen Nvidia to a three-month low as investors start second-guessing the outlook for the burgeoning industry and the vast investment it’s been receiving.
The tech-heavy Nasdaq Composite slumped 3.5% as at 7am in Auckland, with chipmaker Nvidia tumbling 17%, as the low-cost Chinese AI model – which overtook OpenAI’s ChatGPT as the most downloaded free application on Apple’s App Store – prompted a rethink on the heady valuations the sector’s been attracting.
Microsoft and Google-parent Alphabet were also on the backfoot, while Apple and Salesforce were among the leaders, helping keep the Dow Jones Industrial Average in positive territory.
In Europe, Germany’s DAX declined 0.5% with Siemens Energy – which provides hardware for AI infrastructure, slumped 20%.
In New Zealand trading on Monday, components maker Rakon rallied while datacentre investor Infratil declined.
That fear seeped into other asset classes as the Chicago Board Options Exchange’s Volatility Index, known as Wall Street’s fear gauge, spiked higher. Bitcoin sank 5.5% to US$99,120 and gold futures declined 1.5% to US$2,737 an ounce, while Brent crude oil futures dropped 2.4% to US$75.67 per barrel.
“Weak risk sentiment has dominated markets to begin the new trading week,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “The losses were led by technology stocks reflecting concerns that unexpected advances by a Chinese AI company DeepSeek, could challenge the US’s technical edge in artificial intelligence.”
Bluff and bluster
The US dollar had strengthened at the start of the week after US President Donald Trump’s threat slap a tariff on Columbia forced the Latin American nation to backdown on its refusal to accept deported overstayers. The kiwi traded at 56.83 US cents at 7am in Auckland from 56.90 cents yesterday.
Meanwhile, earnings season continued in the Northern Hemisphere with AT&T rallying after its high-speed broadband unit added customers in the December quarter and low-cost airline Ryanair gained after beating profit expectations.
Five of the Magificent 7 companies are due to report later this week, while the monetary policy reviews by the US Federal Reserve and European Central Bank are also in focus.
Locally, Auckland returns from its long weekend and Australian markets are also back from their Australia Day holiday, with futures pointing to a 0.2% decline on the S&P/ASX 200 index.
Data in the antipodes today include December filled jobs from Statistics New Zealand and National Australia Bank’s monthly business survey across the Tasman.
Reporting by Paul McBeth. Image from Andy Kelly on Unsplash.