Chinese AI Chatbot DeepSeek Sparks Tech Sell-Off and Market Concerns

Europe falls and New York tech slumps

(Alliance News) - London's FTSE 100 was weaker on Monday, with miners hurting the FTSE 100, while tech stocks are in focus in New York, as competition from China emerges. The FTSE 100 index traded down 27.06 points, 0.3%, at 8,475.29. The FTSE 250 was down 127.27 points, 0.6%, at 20,390.78, and the AIM All-Share was down 4.30 points, 0.6%, at 710.75. The Cboe UK 100 was 0.3% lower at 849.43, the Cboe UK 250 also shed 0.3% at 17,841.65, and the Cboe Small Companies was 0.1% lower at 15,964.61. In Frankfurt, the DAX 40 shed 1.1% in early trade, while the CAC 40 fell 0.8%. Sterling rose to USD1.2499 early Monday, from USD1.2490 at the time of the London equities close on Friday. The euro inched up to USD1.0513 from USD1.0510. Against the yen, the dollar slumped to JPY153.83 from JPY155.70. A barrel of Brent fetched USD77.35, flat from Friday. Gold faded to USD2,770.54 an ounce from USD2,774.82. Ahead of the New York open, developments in the tech sector are the major story. The Dow Jones Industrial Average is called down 0.9%, the S&P 500 down 2.5% and the Nasdaq Composite is called down by a hefty 4.4%. Among the sharpest falls in pre-market trade came for Broadcom, down 13%, Nvidia, 11% lower and AMD, down 6.2%. On this side of the Atlantic, Scottish Mortgage Investment Trust was down 5.4% at midday in London. It invests in a who's who tech names. Polar Capital Technology Trust and Allianz Technology Trust shed 7.1%. Chinese firm DeepSeek's artificial intelligence chatbot has soared to the top of the Apple Store's download charts, stunning industry insiders and analysts with its ability to match its US competitors. The programme has shaken up the tech industry and hit US technology stocks, which have spent vast sums of cash to get ahead in the fast-developing AI sector. Bannockburn Global Forex analyst Marc Chandler commented: "There have been two significant developments that are rocking US equities and sending US yields sharply lower. First, Chinese-made AI has taken the world by storm. Apparently, DeepSeek is cheaper to build, consumes less energy, and is faster than the other AIs. There seems to be innovations outside of replication. The second is a brouhaha over Colombia's initial refusal to accept US military planes bringing back illegal immigrants. There were tariff and counter-tariff threats before the Colombia appears to have capitulated." Colombia on Sunday backed down and agreed to accept deported citizens sent on US military aircraft, hours after President Trump threatened painful tariffs to punish the defiance to his mass deportation plans. Colombia's leftist president, Gustavo Petro, had earlier said he would only take back citizens "with dignity," such as on civilian planes, and had turned back two US military aircraft with repatriated Colombians. Trump, less than a week back in office, responded furiously and threatened sanctions of 25% that would quickly scale up to 50%. In London, Anglo American was the worst FTSE 100 performer, down 6.7%. One-time suitor BHP cooled its pursuit for now, the Financial Times reported. Citing people close to BHP, a takeover of London-based Anglo American would be too expensive for the Melbourne-headquartered miner, following a rise in the share price of Anglo. Three people close to the situation are said to have noted that following the share price increase, a fresh takeover bid would be too expensive in the near term. It was a generally tough day so far for mining shares. Glencore fell 2.9%, while Antofagasta lost 2.6%. China's manufacturing activity shrank in January for the first time in four months, official data showed Monday, as Beijing battles to sustain the recovery in the world's second-largest economy. The purchasing managers' index - a key measure of industrial output - came in at 49.1 in January, according to the National Bureau of Statistics, below the 50-point mark that separates growth and contraction. The reading was down from 50.1 in December, which was its third straight month in positive territory after ending a six-month decline in October. Good Energy jumped 21%. It said it has accepted a GBP99.4 million takeover from suitor Esyasoft, which sweetened its bid after an approach in October. The Chippenham, England-based renewable electricity supplier and energy services provider will be acquired by energy transition Esyasoft at 490 pence per share. It gives values Good Energy's issued and to be issued share capital at GBP99.4 million, and implies an enterprise value of GBP67.8 million. Construction and engineering firm Costain Group expects annual profit in line with market expectations. The firm said it finished 2024 "strongly", hailing pact awards in the water and rail sectors. Shares surged 10%. Its "high-quality forward work position" stood at GBP5.4 billion at the conclusion of last year, up from GBP3.9 billion 12 months prior. "This, together with growth on existing frameworks and attractive levels of bidding activity, gives the group increasing confidence in its ability to deliver further growth in operating profits and margins," Costain said. It puts market expectations for 2024 adjusted operating profit between GBP41.9 million and GBP43.3 million. At best, this would represent an 8.0% rise from GBP40.1 million in 2023. Interest rate decisions will be in focus as the week progresses. The Bank of Canada and Federal Reserve announce decisions on Wednesday, before the European Central Bank on Thursday. There is also gross domestic product data from the eurozone and US on Thursday. A host of tech names report earnings this week, also of focus. "As 'US exceptionalism' faces its sternest test of the year, the equity markets brace for a torrent of earnings reports from companies constituting nearly 40% of the S&P 500's market capitalization. Their outcomes could either amplify the recent bullish surge or instigate a reevaluation of market sentiments," SPI Asset Management analyst Stephen Innes commented. "In the backdrop of these high stakes, the unwavering beacon of Wall Street remains the robust earnings from Corporate America. Companies outperforming analysts' expectations are not just ticking up but rather leaping in stock valuations post-announcements -- a clear signal that recent earnings are not just meeting but exceeding trader confidence. This surge in corporate profitability is especially noteworthy as it persists despite the overhanging uncertainties of Trump's policy directions and the Federal Reserve's monetary strategies, which together weave a complex tapestry of potential market trajectories." Comments and questions to [email protected] Copyright 2025 Alliance News Ltd. All Rights Reserved.

FTSE 100 steady but Deepseek sparks US tech rout

(Alliance News) - London's blue-chips closed little changed on Monday amid a heavy sell-off in global technology stocks, including a 17% drop for chip maker Nvidia. The FTSE 100 index ended up just 1.36 points at 8,503.71. The FTSE 250 lost 148.55 points, 0.7%, at 20,369.50, and the AIM All-Share fell 3.66 points, 0.50%, at 711.39. The Cboe UK 100 ended up slightly at 852.40 on Monday, the Cboe UK 250 lost 0.5% at 17,811.79, and the Cboe Small Companies rose 0.2% to 16,018.60. In European equities on Monday, the CAC 40 in Paris ended down 0.3%, while the DAX 40 in Frankfurt fell 0.5%. In New York, the Dow Jones Industrial Average was down 0.2%, the S&P 500 1.9% lower, while the Nasdaq Composite was down 3.3%. Nvidia tumbled 17%, wiping around USD500 billion off its market value, while Broadcom slumped 16%, on concerns China's Deepseek's artificial intelligence app could threaten the dominance of the US tech giants. In Europe, ASML declined 7.0%. The Chinese firm's artificial intelligence chatbot soared to the top of the Apple Store's download charts over the weekend, stunning industry insiders and analysts with its ability to match its US competitors. "The Deepseek R1 large language model, which gained global attention last week, is triggering an existential crisis for US tech," observed Kathleen Brooks at XTB. "The focus is now on whether China can do it better, quicker and more cost effectively than the US, and if they could win the AI ?race?." Brooks said the sharp decline in US AI stocks suggests that the ?US dominance premium? will be permanently removed from the US tech giants. "If China is catching up quickly to the US in the AI race, then the economics of AI will be turned on its head. It could also have a geopolitical impact since China could be the first superpower to gain super intelligence. Donald Trump?s reaction to today?s stock market sell off could also be a market-moving event." But Dan Ives at Wedbush Securities called it "another golden buying opportunity and not the time to panic." A handful of times over the last few years there have been major tech sell-offs that were golden buying opportunities....today is another one of them in our view," he remarked. "At the end of the day there is only one chip company in the world launching autonomous, robotics, and broader AI use cases and that is Nvidia. Launching a competitive LLM model for consumer use cases is one thing.....launching broader AI infrastructure is a whole other ballgame and nothing with DeepSeek makes us believe anything different." The market weakness comes ahead of central bank meetings in the US, Canada and Europe this week. The Federal Reserve is expected to leave rates unchanged, while quarter point rate cuts are expected from the Bank of Canada and the European Central Bank. In the US, Barclays expects the Federal Open Market Committee to hold rates at 4.25% to ?4.50%, starting a "potentially extended pause", and to provide little information about future changes, as it awaits more clarity about the economy's evolution. The bank's baseline case is that the FOMC will cut rates by 25 basis points this year, in June. The pound was quoted at USD1.2479 late Monday afternoon in London, down from USD1.2490 at the equities close on Friday. The euro stood lower at USD1.0505, against USD1.0510. Against the yen, the dollar was trading lower at JPY154.16 compared to JPY155.70. UBS upgraded the Lucky Strike and Rothmans cigarettes owner to 'buy' from 'neutral' predicting Velo nicotine pouches will help accelerate new categories' sales growth. It also benefitted from the withdrawal of a proposed ban on menthol cigarettes and flavoured cigars by the Trump administration late on Friday. GSK climbed 3.4% after a prefilled syringe of Shingrix for the treatment of shingles was accepted for review by the European Medicines Agency. The European review of the prefilled syringe follows GSK's receipt of approval from the US Food & Drug Administration in January. Anglo American was the worst FTSE 100 performer, down 6.2%. One-time suitor BHP cooled its pursuit for now, the Financial Times reported. Citing people close to BHP, a takeover of London-based Anglo American would be too expensive for the Melbourne-headquartered miner, following a rise in the share price of Anglo. Three people close to the situation are said to have noted that following the share price increase, a fresh takeover bid would be too expensive in the near term. It was a generally tough day so far for mining shares. Glencore fell 3.7%, while Antofagasta lost 3.3%. China's manufacturing activity shrank in January for the first time in four months, official data showed Monday, as Beijing battles to sustain the recovery in the world's second-largest economy. The purchasing managers' index ? a key measure of industrial output ? came in at 49.1 in January, according to the National Bureau of Statistics, below the 50-point mark that separates growth and contraction. Brent oil was quoted lower at USD77.26 a barrel at the time of the equities close in London on Monday, down from USD77.35 on Friday. Gold dropped to USD2,740.66 an ounce against USD2,774.82. On the FTSE 250, Johnson Matthey rose 2.0% after announcing plans to boost its cash flow after a leading shareholder called for strategic change in December. The construction and engineering firm expects annual profit in line with market expectations but said it had finished 2024 "strongly", hailing awards in the water and rail sectors. It also flagged a "high-quality forward work position" which stood at GBP5.4 billion at the conclusion of last year, up from GBP3.9 billion 12 months prior. Tuesday's global economic calendar sees US durable goods orders figures at 1330 GMT and a US consumer confidence print at 1500 GMT. Tuesday's local corporate calendar sees trading statements from Irn-Bru maker AG Barr, recruiter SThree and computer services provider, Computacenter. The global calendar has full-year results from aeroplane maker Boeing, luxury goods retailer LVMH, drugs firm Novo Nordisk and software retailer SAP. Comments and questions to [email protected] Copyright 2025 Alliance News Ltd. All Rights Reserved.

Europeans down except London ; Prysmian on the bottom

(Alliance News) - On Monday, major European indexes end the first session of the week mixed, with Piazza Affari below parity and London doing slightly better. Weighing on the European and star-studded lists were the unexpected processing performance of DeepSeek, a new 'open-source' model of Artificial Intelligence developed by a Chinese startup. The Chinese AI, according to initial findings, achieves similar processing to that made in the U.S., despite using less advanced chips. "The major U.S. indexes fell heavily before recovering some of their losses," commented Axel Rudolph, senior technical analyst at IG. "This followed the launch of the R1 version of Chinese artificial intelligence DeepSeek, which surpassed ChatGPT as the most downloaded free app in the U.S. and apparently cost less than USD6.0 million to develop." For IG's expert, falling U.S. Treasury yields and investor action helped indexes recover from mid-day losses. The FTSE Mib closed Monday in the fractional red at 38,191.17, the Mid-Cap lost 0.2 percent to 48,832.97, the Small-Cap finished 0.4 percent in the red at 27,980.84, and Italy Growth gave up 0.6 percent to 7,731.66. In Europe, London's FTSE 100 closed in fractional green, Paris' CAC 40 finished 0.2 percent in the red and Frankfurt's DAX 40 lost 0.5 percent. On the macroeconomic front, in the U.S., sales of new single-family homes rose 3.6 percent in December from the previous month, the highest since September and above market expectations. The European Union decided to extend sanctions against Russia over the continuing conflict in Ukraine, following Hungary's go-ahead On the highest-capitalization list in Piazza Affari, Hera did best of all by moving ahead 3.8 percent, with nearly 8 million changed hands. Generali did well, up 1.9%, in its third bullish session. Banco BPM - in the red by 0.2% - announced that it has signed, with Banca Ifigest and as financing banks, a loan agreement in favor of ERM, a company specializing in the renewable energy sector controlled by Moncada Energy Group, for a total amount of EUR20 million. Mediobanca - in the green by 0.2 percent - reported that it bought 560,000 of its own ordinary shares on January 24, for a total price of EUR9.0 million or so. Poste Italiane closed up 1.1 percent. DBR raised its target price on the stock to EUR16.20 from EUR13.50 previously, with a 'buy' recommendation. Campari closed 1.1 percent in the red, after eve's gains. It is reported that Citadel Advisors Europe raised its short position on the stock to 0.87 percent from 0.70 percent previously. Among the bearish, Banca Monte Paschi di Siena closed 2.0% in the red, with over 34 million shares traded. Fears about investments in AI after DeepSeek's exploit, pushed on Prysmian Fund, down 8.8%. On the Mid-Cap, Banco di Desio e della Brianza did well, up 5.2 percent after eve's red. d'Amico International Shipping--down 0.2%--reported Monday that its operating subsidiary d'Amico Tankers DAC had exercised its option to purchase under the bareboat charter agreement on the Houston-based MT Cielo, an LR1 built in January 2019, for about USD26.5 million. ERG finished in the green by 2.1 percent. AQR Capital Management trimmed its short position on the stock to 0.49 percent from 0.52 percent previously. On the Small-Cap, Netweek finished on top with a 47% flight. Good buying on Bialetti, which rallied 21% on the heels of Friday night's 3.5% green. The company is close to a deal with Nuo Capital, the investment arm of Hong Kong family office Wwic, led by Stephen Cheng. The Hong Kong company, controlled by the Pao-Cheng family and the heirs of Hermès founder Émile-Maurice, aims to enhance Bialetti to accelerate growth, particularly in foreign markets. Completion of the deal will also allow full repayment of creditors, concluding the 2018 refinancing agreement. BasicNet - in the red by 1.7 percent - announced Monday that the European Commission has approved under the EU Merger Regulation the creation of a joint venture with private equity giant Permira. CY4Gate - down 4.3 percent - reported that it closed 2024 with EUR8.5 million in contracts awarded, signed for two years. The contracts involve 80 percent primary Italian high-tech customers for the acquisition of technologies and projects in cyber security and 20 percent a foreign institutional customer for the acquisition of evolutionary technologies in Decision Intelligence. On the other side of the list, EPH and Fidia closed 9.7 percent and 10 percent in the red, respectively. Among SMEs, led the rises was Gentili Mosconi - in the green by 6.6 percent - after it announced Monday that it had signed an investment agreement to acquire 100 percent of the share capital of a newco, consisting of the contribution of the business units of Manifatture Tessili Bianchi & C. and its subsidiary D-Tex. Allcore - down 1.1 percent - reported that the board approved the merger by incorporation of its subsidiary Soluzione Meeting. Ilpra - unchanged at EUR3.86 per share - announced Monday the creation of a new trading subsidiary, Ilpra France, based in Saint Bauzille de Montmel, France. The company, 51 percent owned by Ilpra, 29 percent by TJRD34 Conseil and 20 percent by BLPB Conseil84, will have a share capital of EUR50,000 and exclusive rights to distribute Ilpra products in the French market and French overseas territories. Mevim - unchanged at EUR0.54 per share - announced that acting auditor Francesco Calciano has resigned due to multiple professional commitments. Taking over will be alternate Giorgio Di Stefano. OSAI Automation System - down 4.6 percent - reported that the board of directors resolved to start preparatory activities for access to the negotiated crisis settlement. In New York, the Dow gives up 0.1 percent, the Nasdaq loses 3.0 percent while the S&P 500 is 1.8 percent in the red. Among currencies, the euro changes hands at USD1.0494 against USD1.0512 on Friday in closing European equities. In contrast, the pound is worth USD1.2472 from USD1.2448 on Friday evening. Among commodities, Brent is worth USD76.02 per barrel from USD78.20 per barrel at Friday's European stock close. Gold trades at USD2,772.11 an ounce from USD2,774.07 an ounce Friday evening. Tuesday's macroeconomic calendar opens at 0050 CET from Japan with data on the business services cost index. Shortly after, at 0101 CET, the BRC index of UK retail prices will be released. In the morning, at 0600 CET, Japan will release results on the BoJ's CPI consumer price index. At 0845 CET, from France will come data on the consumer confidence index, followed at 0900 CET by the Spanish unemployment rate. At 1100 CET from Spain, consumer confidence index numbers will be released. In the afternoon, at 1430 CET from the US, durable goods orders will be released. At 1500 CET, the house price index will be published, followed at 1600 CET by the consumer confidence report. At 1800 CET, in the Eurozone, ECB President Christine Lagarde's speech is expected. The day will end at 2230 CET with the release of weekly oil stocks from the US. On the Piazza Affari corporate calendar, the results of De' Longhi, Fervi, Gismondi 1754 and Safilo Group are expected. Comments and questions to [email protected] Copyright 2025 Alliance News IS Italian Service Ltd. All rights reserved.