The emergence of a new Chinese competitor in the Artificial Intelligence area, called DeepSeek, has sparked a severe and abrupt change in sentiment toward AI related stocks. Nvidia, who had been the darling of the group for over a year, is down 11.5% in premarket trading and NASDAQ futures are down 3.5%.
S&P futures are down 2.1%, Dow futures are down 0.7%. European markets are falling more moderately with the Dax down 0.8% and the FTSE down 0.2%. With capital coming out of risk assets, Bitcoin is down 4.4% today, clinging to $100,000.
Coming off last week’s rate hike by the Bank of Japan, capital appears to be returning to that country as the Yen is up 1.3% today. The Euro and Pound are both up 0.3% against the US Dollar so far, while the Loonie is steady. Gold is down 0.4%, while Silver is down 0.8%. Commodities are having a tough day. Natural Gas is down 5.6% as last week’s deep freeze fades away. Crude Oil is down 0.6% and Copper is down 0.8%.
The main economic event this week is the Bank of Canada (0.25% rate cut expected) and Federal Reserve Board (no change expected) interest rate announcements, both of which are scheduled for Wednesday. Investors may look for commentary on differing economic conditions between the two countries especially with the potential for new tariffs coming possibly as soon as Saturday February 1st.
This is also peak week for earnings season. Results are on the way from a lot of the largest cap companies in Big Tech (Apple, Amazon.com, Microsoft, Meta, Tesla, IBM, Intel and more), Big Industry (Boeing, Caterpillar and others), Big Oil (Chevron, Exxon Mobil) Big Pharma (Abbvie) and Big Credit (Visa and Mastercard).