Overnight, the unveiling of a new Chinese AI model from DeepSeek sent shockwaves through global markets, triggering a widespread tech sell-off, particularly in the US. The Nasdaq plummeted 3%, with Nvidia experiencing a significant 16.7% drop and Broadcom also suffering losses. This sell-off spilled over into cryptocurrency and oil markets, reflecting a broader risk-off sentiment. However, Apple defied the trend, posting a gain of over 3.7%.
US Tech Sell-off
US tech stocks suffered heavily after the announcement of the DeepSeek AI.
The Nasdaq Composite dropped 3.07%, ending at 19,341.83, while the S&P 500 declined by 1.46%, closing at 6,012.28. The Dow Jones Industrial Average gained 289.33 points, or 0.65%, to finish at 44,713.58. Strength in Apple, Johnson & Johnson, and Travelers contributed to the boost in the 30-stock index.
The yield on the US 10-year Treasury bond fell to a 2025 low of 4.5%.
Oil Prices Decline
Oil prices slid more than 2%, falling below $73 a barrel, reflecting concerns about global economic growth in light of the tech sell-off and broader market uncertainty.
Cryptocurrency Market Tumbles
Bitcoin tumbled 5.1% to a near two-week low of $99,740. This drop indicates that the risk-off sentiment extended to the cryptocurrency market.
European Markets Show Restraint
European markets exhibited a more muted reaction to the news, with the Stoxx Europe 600 index experiencing only a slight decline. Defensive sectors, such as chemicals and food, performed relatively well, indicating a degree of caution among European investors.
Australian Market
ASX futures point to a muted open, with modest declines expected as Australian investors digest the global market turmoil. The Australian dollar remains steady, suggesting a more measured reaction compared to other markets.
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