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Asian Markets Brace for AI Fallout After US Rout: Markets Wrap

Jan 27, 2025 - financialpost.com
Asian markets are preparing for volatility following a significant downturn in the U.S. stock market, driven by concerns over the artificial intelligence sector. A selloff was triggered when a low-cost AI model from Chinese startup DeepSeek topped Apple's app store, raising doubts about tech valuations. This led to a 1.5% drop in the S&P 500 and a 3% decline in the Nasdaq 100, with Nvidia experiencing a historic 17% market-cap loss. The selloff has prompted a reassessment of AI-driven market assumptions, impacting major indices heavily weighted with tech stocks.

The market turmoil comes as Asian markets, including Tokyo and Sydney, brace for potential declines amid Lunar New Year celebrations. The downturn in tech stocks has also affected global currencies and bonds, with haven currencies like the yen and Swiss franc climbing. Investors are now focusing on upcoming earnings reports from major tech companies like Microsoft and Apple to gauge market sentiment. Meanwhile, DeepSeek, founded by Liang Wenfeng, has gained attention for its open-source AI models, which have sparked interest and concern in the tech sector.

Key takeaways:

  • Asian markets are preparing for turbulence following a significant selloff in the AI sector on Wall Street.
  • Nvidia Corp. experienced a historic market-cap loss, dropping 17% amid concerns over AI valuations.
  • DeepSeek, a Chinese startup, triggered market concerns after its AI model topped Apple's app store.
  • Investors are closely watching upcoming earnings from major tech companies to gauge market sentiment.
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