Tech war between China and the US begins, DeepSeek worries markets, company news and geopolitics
Stock market news
• China's DeepSeek has become a Black Swan for the data center industry. All stocks associated with them fell sharply yesterday. But money flowed like a river into regular Value stocks. As a result, the DJIA index rose by 0.65% yesterday, strengthening its leadership in 2025. And the Nasdaq 100 suffered the greatest losses (-3%).
Fundamentally, nothing terrible happened to the stock market - one theme deflated and investors fled to forgotten sectors. The broad stock market remains in a bullish trend.
A correction is quite possible today and Wednesday will be of greatest interest. And it's not just about the announcement of the Fed's monetary decision, but the main question is whether the sell-off is over or not.
• Against the backdrop of flight from risk, demand for safe assets has grown - the yield on 10-year US government bonds fell to 4.5% per annum. But here a real reversal will occur only after the release of data on a decrease in inflation in the US (we expect this in February based on January data).
The US dollar remained stable overall, and the strongest safe-haven currencies were the Japanese yen and the Swiss franc. Bitcoin experienced a volatile day with a fall below $98 thousand, but returned to $102 thousand.
So - Monday turned Black only for the topic of data centers. In fact, the example of Chinese DeepSeek served the rest of the economy well and healthy. It turned out that the development of AI does not require as many resources and money as was previously thought. This means that the introduction of AI into our lives will soon go by leaps and bounds.
• The exceptionalism that has driven Wall Street to record heights at the expense of America’s unrivaled tech companies is suddenly making it look vulnerable, and perhaps not so unrivaled. On Monday, Chinese startup DeepSeek’s low-cost AI model wiped nearly $600 billion off chip leader Nvidia’s value, as the assumptions behind a two-year rally in all things AI suddenly looked brittle. DeepSeek claims it has matched US AI performance with far less data and computing power. So much for the sharp reversal of positions in data centres, cable makers, energy retailers and all manner of AI-ancillary businesses. The absence of many such businesses or big tech names from European markets this time around is a silver lining, allowing the broader markets in London and across the Continent to escape the worst.
• German software giant SAP beat profit estimates on Monday after reporting strong results and expects cloud growth to accelerate, it said early Tuesday, though traders may want to pay close attention to how much of that growth it expects AI to provide.
• Shares in chip-making equipment maker ASML, which fell 7% on Monday, could come under further pressure as selling intensified in Tokyo trading on Tuesday.
The China-US AI war has officially begun. Xi responded to Trump: Bank of China has invested 1 trillion yuan in artificial intelligence.
- The funds will be used to create advanced AI technologies;
- The program received a loud name, inspired by the communist ideology of the last century, - "Action Plan";
- Most importantly, this is an open response to Trump's moves
- The Chinese bank allocated colossal funds almost immediately after the US president allocated a huge amount to the development of the superintelligence "Stargate".
- China's DeepSeek AI has surpassed ChatGPT and now tops the ranking of free Apple apps in the US.
• The number of Bitcoin wallets holding at least $100 has grown 25% over the past year to nearly 30 million, reflecting an influx of new participants into the market, according to Binance, indicating a resurgence of interest and optimism about Bitcoin.
• The New York Times published an article with the headline that Trump likes the idea of a strategic bitcoin reserve. Cryptocurrency funds received $1.9 billion after Trump's orders. Global cryptocurrency investment products experienced a significant rise last week, according to a report from CoinShares.
• Tesla has joined a lawsuit against the European Union over tariffs on Chinese electric cars. Similar lawsuits were filed last week by BMW, Chinese automakers BYD, Geely, SAIC and the Automobile Association of the China Chamber of Commerce.
• DeepSeek has about 50,000 NVIDIA H100 graphics cards they can't talk about due to US export controls - Billionaire and Scale AI CEO Musk responded to this interview with "obvious". Is it all bad for NVDA stock and time to take a closer look?
• The shares of NBIS Nebius Group are falling the most in the US - minus 32%. Developing solutions in the field of artificial intelligence and cloud computing.
• The release of DeepSeek's massive R1 language model has swept through the tech industry, causing major AI stocks to fall significantly. But the data center industry took the brunt of the blow.
• On Monday, Nvidia (-17%) saw its market capitalization fall by $593 billion, marking the biggest single-day decline in the history of the U.S. market.
• Amid turmoil in the tech sector, Aurora Mobile shares soared 207% pre-market. The gains came after the integration of DeepSeek R1 into the GPTBots.ai platform, which expands the platform’s AI capabilities, which are already supported by models from OpenAI, Meta, and Microsoft (MSFT).
Aurora Mobile’s statement highlighted the model’s efficiency and adaptability, which drives AI-powered innovation in the broader market.
• SoFi Technologies (SOFI) fell 10% after issuing guidance that missed Wall Street expectations. Despite a modest rise in earnings per share in Q4, its 2025 guidance for GAAP EPS and adjusted net income came in below consensus. The company remains optimistic about its growth, expecting adjusted EBITDA to increase and tangible book value to grow in the coming years.
• Oppenheimer analysts suggest that the release of the DeepSeek AI model could be useful for semiconductor equipment companies such as Applied Materials (AMAT), KLA Corp. (KLAC) and Lam Research (LRCX). Despite the recent downturn, these companies could see long-term growth in demand as AI advances.
• AT&T (T) reported better-than-expected subscriber growth, adding 482,000 new wireless subscribers, though that was offset somewhat by a disappointing fiscal 2025 earnings outlook. The company boosted revenue thanks to its mobile business and fiber subscriber growth, reflecting positive subscriber growth.
T shares rose 6%.
• Tesla (TSLA) saw early gains as DeepSeek's AI model raised concerns about AI premiums in tech stocks. Tesla's continued investment in AI infrastructure, including the Dojo supercomputer and Cortex cluster, underscores its commitment to AI development despite market uncertainty.
• MicroStrategy (MSTR) announced an offering of 2.5 million shares of its Series A perpetual preferred stock. Proceeds will be used for corporate purposes, including the purchase of bitcoin. Microstrategy bought an additional 10.1 thousand BTC for $1.1 billion at an average price of $105.6 thousand.
• Aspen Technology (AZPN) shares hit all-time high as Emerson buys back remaining shares. Emerson Electric Co. said it will buy all of the Aspen Technology shares it does not already own for $7.2 billion in an all-cash deal.
• Energy Providers Fall Along With Big Tech on DeepSeek AI Fears - Bloomberg The sell-off in global tech stocks is sending shockwaves not just through chipmakers and the G7 but also through the companies expected to power the sector.
• Volkswagen is ready to hand over its factories to Chinese electric car makers in order to cope with the crisis in the German auto industry.
• Auditors have been given tougher guidance on how to assess companies' environmental claims.
• Bitcoin falls to 11-day low amid sell-off in tech assets.
• Starbucks sales to fall again as investors look for change.
• Middleby's board of directors is considering strategic options, including a separation.
• World Bank President Warns Against Hasty Reaction to Trump's Policies
• India's luxury $4 billion DLF project to be completed in four years
• Humanity Protocol valued at $1.1 billion after latest fundraise.
• Emerson to buy remaining AspenTech for $265 per share.
• India's Bajaj Housing Finance reported a 25 percent rise in third-quarter profit on strong lending growth.
• DHB Bank to reduce its presence in Belgium.
• India's central bank replaces Aviom India Housing Finance's board to begin bankruptcy proceedings.
• China's central bank conducted 1.7 trillion yuan in direct reverse repos in January.
• DBS increases stake in China's Shenzhen Rural Commercial Bank to more than 19%.
• MPS shares in Italy fall ahead of Mediobanca board meeting on bid
• A group of lawyers is calling for reform to make it easier to create new banks in the US.
• India's IDFC First Bank hits 21-month low as microfinance stress hits third-quarter profit.
• The calendar also includes data on consumer confidence in France and the annual results of LVMH and Christian Dior.
• Nasdaq futures steadied in Asian trading, as did Nvidia shares in over-the-counter trading, as well as FTSE and European futures.
• Markets in China, Taiwan and South Korea were closed for the holiday, and trading in Hong Kong was down ahead of the Lunar New Year, leaving attention focused on Japan.
• Shares of Nvidia supplier Advantest fell 11%, bringing its two-day decline to about 20%. Furukawa Electric, which makes fiber optics for data centers and has tripled in value in the past year, posted a similar drop this week.
• Boeing, General Motors and Starbucks report in the U.S. this afternoon. Later this week, fragile markets will face earnings reports from Meta, Microsoft and Tesla, all of which report on Wednesday.
• Analysts say DeepSeek's pricing outpaces competitors' offerings and could force some of those companies to cut their AI spending.
• Policy meetings are also due later this week in the US and Europe. Monday's market collapse prompted traders to price in about 9 additional basis points of Federal Reserve easing.
Key events that could impact markets on Tuesday:
- Earnings: SAP, Dior, LVMH, Boeing, Starbucks, Lockheed Martin, General Motors
- Economy: French consumer confidence, ECB bank lending survey
Fundamental news
• Germany Ifo Business Climate Index showed improvement in the German economy. It rose from 84.7 to 85.1 (expected 84.9)
• Sales of new single-family homes in the U.S. rose more than expected in December, further evidence that housing market activity has rebounded in late 2024, although rising mortgage rates remain a headwind.
• China's industrial profits have fallen for the third year in a row. In 2024, industrial profits fell by 3.3%, and in 2023, the decline was 2.3%.
• Hungary blocked a joint appeal by EU countries on non-recognition of the presidential elections in Belarus - Radio Liberty.
• Danish Prime Minister Mette Frederiksen unexpectedly invited the leaders of the Nordic countries to an informal dinner
to discuss the situation in Greenland and other global issues -TV2.
• Colombia agreed to accept planes with migrants deported from the US after Trump's threats - Fox News. "America is respected again" - this is how the White House commented on Colombia's quick agreement to accept migrants from the US deported from that country.
• California wants to secede from the United States, - NYP. The so-called "Calexit" initiative, if it manages to collect signatures, will be on the 2028 ballot and will ask voters: "Should California secede from the United States and become a free and independent country?" The Democrats are not letting up and are ready to do anything to retain power at least in California?
• Britain moves en masse to 4-day working week, with 200 more companies adopting shorter week because it improves productivity - The Guardian.