By South China Morning Post | Created at 2025-01-27 16:26:28 | Updated at 2025-01-29 02:46:50
1 day ago
Wall Street had a rough start to the week on concern that a cheaper artificial intelligence-model from China could threaten the dominance of US technology, spurring a sell-off in stocks and a flight to haven assets.
From New York to London and Tokyo, equities got hammered, with the S&P 500 dropping 1.9 per cent and the Nasdaq 100 down 3.1 per cent. The latest AI model from Chinese start-up DeepSeek rose to the top of the Apple’s App Store charts over the weekend, presenting a visible challenge to costlier models like OpenAI and raising questions over the hundreds of billions in planned spending on the technology by the likes of Microsoft, Meta Platforms and Alphabet.
Treasuries rallied alongside haven currencies like the yen and the Swiss franc. Bitcoin and other cryptocurrencies tumbled.
“What was shaping up to be a big week in the markets got even bigger with the disruption in the AI space,” said Chris Larkin at E*Trade from Morgan Stanley. “That could make this week’s megacap tech earnings even more critical to market sentiment.”
Monday’s plunge drove new fissures into a market narrative that prevailed since the re-election of Donald Trump in November, the America-first, tech-fuelled uber bullishness that saw a clear upwards path for risky assets spurred by deregulation, tax cuts and even government sponsorship of AI investment. Treasury yields, up almost half a percentage point since November, slid sharply as haven-seeking investors laid aside concern – for today, anyway – that the new president’s policies will stoke inflation.
