Tech Stocks Fall
All eyes are on the tech sector today ahead of the US open as AI stocks plunge on the back of China’s unveiling of a new AI assistant to rival the omnipresent ChatGPT. DeepSeek this weekend rolled out a rival software which it claims is far cheaper to run and uses less data than current world-leader ChatGPT. The DeepSeek model poses a big threat to the west’s current dominance in the AI sector with the model quickly surging into the top spot on the Apple app store, ahead of ChatGPT.
Chinese AI Threat
Over the last 18 months, the US has spearheaded the charge in AI with US companies taking pole position in the supply chain, leading to the massive rally in the stocks of firms such as Nvidia (chip maker) and Alphabet and Microsoft. However, DeepSeek is now posing a very real threat to this narrative with these stocks seeing heavy selling ahead of the US open and traders mull the possibility of a power shift towards China.
FOMC On Watch
Looking ahead this week, traders will also be closely watching the Fed on Wednesday. A dovish shift in rates pricing over the last fortnight has been a big driver of the USD sell-off/stock rally we’ve seen in late Jan. If the Fed reinforces this view this week, stocks could see a fresh push higher. However, if the Fed takes a more neutral/hawkish tone, fuelling a scaling back of rate-cut expectations, this could send stocks sharply lower.
Technical Views
Nasdaq
The rally in the Nasdaq has stalled for now into the rest of the broken bull trend line, ahead of the 22,312 level. If we reverse lower from here, 20,668.27 will be the key support to watch, with bulls needing to defend this level to prevent a deeper drop near-term.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.