Afp Business Asia

US stocks and shares in chip-making giant Nvidia on Tuesday clawed back some of their losses following a steep sell-off a day earlier triggered by the sudden success of Chinese artificial intelligence firm DeepSeek.American tech shares tanked Monday, with Nvidia tumbling almost 17 percent, after China’s DeepSeek unveiled its R1 chatbot, which it claims can match the capacity of top US AI products for a fraction of their costs.Nvidia, which designs chips used in AI applications, clawed back gains of 8.9 percent on Tuesday, leaving it well below last week’s levels. All three major indices on Wall Street finished higher, with the Nasdaq Composite rising 2.0 percent buoyed by a rise in tech stocks, reversing some of its losses from Monday. Despite these gains, Briefing.com’s Patrick O’Hare noted that this was not a broad market advance.The rally was “probably more of a reflection of people embracing the idea that yesterday’s sell off in these mega cap and AI plays was overdone,” he said. Elsewhere, European stock markets were mixed while oil prices inched up, as traders awaited interest-rate decisions from the US Federal Reserve and European Central Bank this week.- Nvidia bounceback -Nvidia’s Monday plunge wiped close to $600 billion from its market capitalization — the largest single-day loss for a public company in stock market history.The Nvidia sell-off “may have gone too far,” said Kathleen Brooks, research director at XTB, adding that there were doubts over whether DeepSeek’s AI was developed as cheaply as it claims.”It may be too early to write off Nvidia yet, even though the prospect of a Chinese rival is causing a crisis for the chip maker,” she added.Gains in US equities last year were driven by a handful of large tech stocks led by Nvidia, and the wider stock market largely avoided Monday’s rout.”It’s difficult to work out if the worst is now over, or if yesterday’s slump was just another sign that the top is already in for US equities,” said David Morrison, senior analyst at Trade Nation.Earlier, Tokyo fell as AI-linked companies were pulled lower and new comments by US President Donald Trump rattled analysts.The dollar rose after Trump said Monday that he wanted universal tariffs “much bigger” than the 2.5 percent suggested by his newly-confirmed Treasury Secretary Scott Bessent, fanning fresh fears about a trade war.Trump said he wants high tariffs on imported metals, pharmaceuticals and semiconductors.Investors will turn their attention to interest-rate decisions this week.The Federal Reserve’s policy-making committee meets Wednesday and is largely expected to leave rates unchanged, despite Trump’s calls for lower interest rates from the independent US central bank.A day later, the European Central Bank will hold a press conference after its first meeting of the year, with some analysts expecting a small cut in lending rates. – Key figures around 2130 GMT -New York – Dow: UP 0.3 percent at 44,850.35 points (close)New York – S&P 500: UP 0.9 percent at 6,067.70 (close) New York – Nasdaq Composite: UP 2.0 percent at 19,733.59 (close)London – FTSE 100: UP 0.4 percent at 8,533.87 (close)Paris – CAC 40: DOWN 0.1 percent at 7,897.37 (close)Frankfurt – DAX: UP 0.7 percent at 21,430.58 (close)Tokyo – Nikkei 225: DOWN 1.4 percent at 39,016.87 (close)Hong Kong – Hang Seng Index: UP 0.1 percent at 20,225.11 (close)Shanghai – Composite: Closed for a holidayEuro/dollar: DOWN at $1.0433 from $1.0492 on MondayPound/dollar: DOWN at $1.2440 from $1.2496Dollar/yen: UP at 155.53 yen from 154.61 yen Euro/pound: DOWN at 83.84 pence from 83.94 pence Brent North Sea Crude: UP 0.5 percent at $77.49 per barrelWest Texas Intermediate: UP 0.8 percent at $73.77 per barrel

US stocks and shares in chip-making giant Nvidia on Tuesday clawed back some of their losses following a sell-off triggered by the sudden success of Chinese artificial intelligence firm DeepSeek.US tech shares tanked Monday, with Nvidia tumbling 17 percent, after China’s DeepSeek unveiled its R1 chatbot, which can apparently match the capacity of top US AI products for a fraction of their development costs.Nvidia, which designs chips used in AI applications, was up 2.8 percent in late morning trading, though still well below last week’s levels. The tech-heavy Nasdaq index was up around one percent after dropping more than three percent the previous day. The Dow and the wider S&P index were also higher, though lagging behind the Nasdaq. Elsewhere, European stock markets were mixed while oil prices inched up, as traders awaited interest-rate decisions from the US Federal Reserve and European Central Bank due this week.Nvidia’s Monday plunge wiped more than half a trillion dollars from its market capitalisation — the largest single-day loss in stock market history.The Nvidia sell-off “may have gone too far”, said Kathleen Brooks, research director at XTB, especially given some doubts over whether DeepSeek’s AI was developed as cheaply as it claims.”It may be too early to write off Nvidia yet, even though the prospect of a Chinese rival is causing a crisis for the chip maker,” she said.Gains in US equities last year were driven by a handful of large tech stocks, and the wider stock market largely avoided Monday’s rout. Nvidia has been the standout company leading a drive by investors to seek out all things AI while ignoring the massive sums it and companies such as Google and Microsoft are investing.”It’s difficult to work out if the worst is now over, or if yesterday’s slump was just another sign that the top is already in for US equities,” said David Morrison, senior analyst at Trade Nation.Boeing reported a hefty fourth-quarter loss of almost $4 billion due to labour strikes and manufacturing issues. But the aeroplane maker’s shares rallied more than four percent on hopes that early turnaround signs under a new CEO may bear fruit.General Motors reported a $3-billion quarterly loss Tuesday due to costs from restructuring a Chinese venture, and its shares dropped almost 10 percent even though the automaker had forecast higher profits this year.Microsoft and Facebook-parent Meta report Wednesday.Earlier, Tokyo fell as AI-linked companies were pulled lower and US President Donald Trump’s comments rattled analysts.The dollar rose after Trump said he wanted universal tariffs “much bigger” than the 2.5 percent suggested by his Treasury Secretary Scott Bessent, fanning fresh fears about a trade war.Trump said he wants high tariffs on imported metals, pharmaceuticals and semiconductors.Investors will turn their attention to interest-rate decisions this week.The US Federal Reserve’s policy-making committee meets Wednesday and is largely expected to leave rates unchanged, despite Trump’s calls for lower interest rates from the officially independent central bank.On Thursday, the European Central Bank will hold a press conference after its first meeting of the year, with some analysts expecting a small cut in lending rates. – Key figures around 1640 GMT -New York – Dow: UP 0.1 percent at 44,772.63 points New York – S&P 500: UP 0.4 percent at 6,036.52  New York – Nasdaq Composite: UP 1.1 percent at 19,544.97 London – FTSE 100: UP 0.4 percent at 8,533.87 (close)Paris – CAC 40: DOWN 0.1 percent at 7,897.37 (close)Frankfurt – DAX: UP 0.7 percent at 21,430.58 (close)Tokyo – Nikkei 225: DOWN 1.4 percent at 39,016.87 (close)Hong Kong – Hang Seng Index: UP 0.1 percent at 20,225.11 (close)Shanghai – Composite: Closed for a holidayEuro/dollar: DOWN at $1.0429 from $1.0492 on MondayPound/dollar: DOWN at $1.2438 from $1.2496Dollar/yen: UP at 155.65 yen from 154.61 yen Euro/pound: DOWN at 83.85 pence from 83.94 penceBrent North Sea Crude: UP 0.2 percent at $77.20 per barrelWest Texas Intermediate: UP 0.2 percent at $73.30 per barrel

Japanese tech firms sank Tuesday following a rout on Wall Street after China’s DeepSeek chatbot upended the artificial intelligence sector and sparked questions about huge investments by US titans.The dollar rallied on a report saying Washington was considering universal tariffs on a range of goods, fanning fresh fears about a trade war. Other Asian equity indices ended mixed in limited trade ahead of the Lunar New Year break.European stock markets rose in morning deals and oil prices advanced, as traders awaited interest-rate decisions from the US Federal Reserve and European Central Bank due this week.Tokyo-listed companies linked to the artificial intelligence sector tanked for a second straight day as investors tracked a rout on Wall Street that saw Nvidia crumble 17 percent, wiping more than half-a-trillion dollars off its market capitalisation.The retreat came after DeepSeek unveiled its R1 chatbot, which has apparently shown the ability to match the capacity of US AI pace-setters for a fraction of the investments made by American companies. “The DeepSeek news has triggered a rethink on the AI revolution and arguably one of the pillars of the current US exceptionalism,” said Rodrigo Catril, foreign exchange strategist at National Australia Bank.”If R1 is as good as first impressions seem to suggest, then demand for sophisticated chips, infrastructure (think data centres) and energy may not be as large as originally thought.”Nvidia has been the standout company that has led the drive by investors to seek out all things AI, spending vast sums of cash but seeing their share prices rocket.The US chip firm has piled on about 1,900 percent in five years.The DeepSeek bombshell also came on the heels of President Donald Trump’s announcement of a new $500 billion venture to build infrastructure for artificial intelligence in the United States.Trump said the release of DeepSeek’s model “should be a wake-up call for our industries that we need to be laser-focused on competing to win”.He argued that it could be a “positive” for US tech giants.”Instead of spending billions and billions, you’ll spend less, and you’ll come up with hopefully the same solution,” he said.Sam Altman, the boss of OpenAI, which runs lead US chatbot ChatGPT, called DeepSeek “impressive”.Wall Street’s Nasdaq index filled with tech stocks tanked more than three percent and the S&P 500 more than one percent Monday, with another US chip-maker, Broadcom, off 17.4 percent.The selling in Tokyo extended into Tuesday, with the Nikkei ending down 1.4 percent. In the semiconductor sector, Advantest plunged more than 11 percent, while Tokyo Electron shed 5.7 five percent and Disco Corporation almost three percent.Tech investor SoftBank, which is a key investor in Trump’s AI project, tumbled more than five percent, having lost more than eight percent the day before.- Greenback rally -The dollar pushed higher after the Financial Times reported that US Treasury Secretary Scott Bessent was looking to impose universal tariffs of 2.5 percent on goods initially and lifting them by the same amount each month. It said the move would give room for negotiations with the White House but the tariffs could go as high as 20 percent. The report comes after Trump rattled confidence Sunday by a row with Colombia over deportations, in which the president said he would hit the country with 25 percent levies.Bogota backed down after a short standoff, but analysts said the development highlighted the president’s willingness to weaponise tariffs.- Key figures around 0945 GMT -London – FTSE 100: UP 0.6 percent at 8,550.13 pointsParis – CAC 40: UP 0.3 percent at 7,932.00Frankfurt – DAX: UP 0.4 percent at 21,365.92Tokyo – Nikkei 225: DOWN 1.4 percent at 39,016.87 (close)Hong Kong – Hang Seng Index: UP 0.1 percent at 20,225.11 (close)Shanghai – Composite: Closed for a holidayNew York – Dow: UP 0.7 percent at 44,713.58 (close)Euro/dollar: DOWN at $1.0442 from $1.0492 on MondayPound/dollar: DOWN at $1.2451 from $1.2496Dollar/yen: UP at 155.47 yen from 154.61 yen Euro/pound: DOWN at 83.87 pence from 83.94 penceBrent North Sea Crude: UP 0.5 percent at $76.48 per barrelWest Texas Intermediate: UP 0.5 percent at $73.55 per barrel

Chinese startup DeepSeek, which has sparked panic on Wall Street with its powerful new chatbot developed at a fraction of the cost of its competitors, was founded by a hedgefund whizz-kid who believes AI can change the world.Based out of the eastern Chinese city of Hangzhou — sometimes known as “China’s Silicon Valley” — DeepSeek has come seemingly out of nowhere to release a cutting-edge product.But in China it was already making waves, last year dubbed the “Pinduoduo of AI” — a reference to a popular online shopping app that steamrolled big players like Alibaba with its low prices.DeepSeek has won plaudits for its cost-effectiveness and praise in China for its seeming ability to navigate US sanctions that have aimed to prevent access to the high-tech chips needed to power the AI revolution.AFP paid visits to the firm’s offices in both Hangzhou and the capital Beijing on Tuesday, but offices appeared closed for the Lunar New Year holidays.The firm is the child of tech and business prodigy Liang Wenfeng, born in 1985 and an engineering graduate of Hangzhou’s prestigious Zhejiang University, where he has said he became convinced “artificial intelligence would change the world”.He spent years trying to work out how to apply AI to a number of different fields, according to an interview with Chinese investment news outlet Waves last year.But he eventually struck gold with High-Flyer, a quantitative investing firm specialising in using AI to analyse stock market patterns.That technique brought in tens of billions of yuan in assets managed, and made it one of China’s top quantitative hedge funds.”We just do things according to our own pace, then calculate costs and prices,” Liang told Waves.”Our principle is to not subsidise or make a huge profit.”- ‘More a geek than a boss’ -For Liang, DeepSeek was always a passion project.In 2021, the Financial Times reported, he began purchasing Nvidia graphic processing units for a side project — an account also featured in a local media report on the firm.Associates told Waves he is “not at all like a boss and much more like a geek”, with a “terrifying ability to learn”.And his passion project has now shocked industry experts and triggered a plummet in the shares of US chip-making giant Nvidia.It also brought Liang right into the corridors of power.Last week, he appeared in a lineup of other key business representatives meeting with China’s second-ranking leader, Premier Li Qiang, at a seminar to solicit opinions on the government’s economic work for the year ahead.Footage of the meeting from Chinese state broadcaster CCTV showed a moppy-haired Liang wearing thick-rimmed glasses addressing Li, who sat listening intently from his chair opposite.- ‘Wake-up call’ -Beijing has good reason to be pleased: DeepSeek’s success called into question the vast sums of money funnelled by tech giants into developing advanced generative AI, as well as the ability of Western sanctions to prevent Chinese competitors from keeping up — or even winning.US President Donald Trump said it was a “wake-up call” for Silicon Valley, and tech investor and ally Marc Andreessen declared it was “AI’s Sputnik moment”.It also amplified calls for Washington to get even tougher on restricting Chinese firms from getting hold of high-tech chips.In his interview with Waves, Liang acknowledged that the toughest obstacle has been those US curbs. “Money has never been the problem we face; it’s the embargo on high-end chips,” he said.But beyond the geopolitics, the “geeky” AI guru said he hoped the technology could help us understand deeper things about the human mind.”We hypothesize that the essence of human intelligence might be language, and human thought could essentially be a linguistic process,” he said.”What you think of as ‘thinking’ might actually be your brain weaving language.”

Having shattered assumptions in the tech sector and beyond about the cost of artificial intelligence, Chinese startup DeepSeek’s new chatbot is now roiling another industry: energy companies.The firm says it developed its open-source R1 model using around 2,000 Nvidia chips, just a fraction of the computing power generally thought necessary to train similar programmes.That has significant implications not only for the cost of developing AI, but also the energy for the data centres that are the beating heart of the growing industry.The AI revolution has come with assumptions that computing and energy needs will grow exponentially, resulting in massive tech investments in both data centres and the means to power them, bolstering energy stocks.Data centres house the high-performance servers and other hardware that make AI applications work.So might DeepSeek represent a less power-hungry way to advance AI?Investors seemed to think so, fleeing positions in US energy companies on Monday and helping drag down stock markets already battered by mass dumping of tech shares.Constellation Energy, which is planning to build significant energy capacity for AI, sank more than 20 percent.”R1 illustrates the threat that computing efficiency gains pose to power generators,” wrote Travis Miller, a strategist covering energy and utilities for financial services firm Morningstar.”We still believe data centers, reshoring, and the electrification theme will remain a tailwind,” he added.But “market expectations went too far.”- Nuclear ambitions -In 2023 alone, Google, Microsoft and Amazon ploughed the equivalent of 0.5 percent of US GDP into data centres, according to the International Energy Agency (IEA).Data centres already account for around one percent of global electricity use, and a similar amount of energy-related greenhouse gas emissions, the IEA says.Efficiency improvements have so far moderated consumption despite growth in data centre demand.But the IEA projects global electricity use by data centres could double from 2022 figures by next year, to around Japan’s annual consumption.That growing demand is unevenly spread.Data centres accounted for about 4.4 percent of US electricity consumption in 2023, a figure that could reach up to 12 percent by 2028, according to a report commissioned by the US Department of Energy.Last year, Amazon, Google and Microsoft all made deals for nuclear energy, either from so-called Small Modular Reactors or existing facilities.Meta meanwhile has signed contracts for renewable energy and announced it is seeking proposals for nuclear energy supplies.For now though, data centres generally rely on electricity grids that are often heavily dependent on fossil fuels.- ‘Jevons paradox strikes again!’ -Data centres also suck up significant amounts of water, both indirectly due to the water involved in electricity generation, and directly for use in cooling systems.”Building data centres requires lots of carbon in the production of steel and also lots of carbon-intensive mining and production processes for creating the computing hardware to fill them,” said Andrew Lensen, senior lecturer in artificial intelligence at Victoria University of Wellington.”So if DeepSeek was to replace models like OpenAI’s… there would be a net decrease in energy requirements.”However, increasing efficiency in technology often simply results in increased demand — a proposition known as the Jevons paradox.”Jevons paradox strikes again!” Microsoft CEO Satya Nadella wrote on X on Monday.”As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can’t get enough of,” he added.Lensen also pointed out that DeepSeek uses a “chain-of-thought” model that is more energy-intensive than alternatives because it uses multiple steps to answer a query.These were previously too expensive to run, but could now become more popular because of efficiencies.Lensen said DeepSeek’s impact might be to help US companies learn “how they can use the computational efficiencies to build even larger and more performant models”.”Instead of making their model 10 times smaller and efficient with the same level of performance, I think they’ll use the new findings to make their model more capable at the same energy usage.”

Fears of upheaval in the AI gold rush rocked Wall Street on Monday following the emergence of a popular ChatGPT-like model from China, with US President Donald Trump saying it was a “wake-up call” for Silicon Valley.Last week’s release of the latest DeepSeek model initially received limited attention, overshadowed by the inauguration of Trump on the same day.However, over the weekend, the Chinese artificial intelligence startup’s chatbot surged to become the most downloaded free app on Apple’s US App Store, displacing OpenAI’s ChatGPT.What truly rattled the industry was DeepSeek’s claim that it developed its latest model, the R1, at a fraction of the cost that major companies are investing in AI development, primarily on expensive Nvidia chips and software.The development is significant given the AI boom, ignited by ChatGPT’s release in late 2022, has propelled Nvidia to become one of the world’s most valuable companies.The news sent shockwaves through the US tech sector, exposing a critical concern: should tech giants continue to pour hundreds of billions of dollars into AI investment when a Chinese company can apparently produce a comparable model so economically?DeepSeek’s apparent advances were a poke in the eye to Washington and its priority of thwarting China by maintaining US technological dominance.Trump reacted quickly on Monday, saying the DeepSeek release “should be a wake-up call for our industries that we need to be laser-focused on competing to win.”He argued it could be a “positive” for US tech giants, adding: “instead of spending billions and billions, you’ll spend less, and you’ll come up with hopefully the same solution.”OpenAI chief executive Sam Altman said in a post on X that it was “legit invigorating to have a new competitor.”He called DeepSeek’s R1 “an impressive model, particularly around what they’re able to deliver for the price,” and pledged to speed up some OpenAI releases.The development comes against the background of a US government push to ban Chinese-owned TikTok in the United States or force its sale.David Sacks, Trump’s AI advisor and prominent tech investor, said DeepSeek’s success justified the White House’s decision to reverse executive orders, issued under Joe Biden, that established safety standards for AI development.The regulations “would have hamstrung American AI companies without any guarantee that China would follow suit,” Sacks wrote on X.Adam Kovacevich, CEO of the tech industry trade group Chamber of Progress, echoed the sentiment: “Now the top AI concern has to be ensuring (the United States) wins.”Tech investor and Trump ally Marc Andreessen declared “Deepseek R1 is AI’s Sputnik moment,” referencing the 1957 launch of Earth’s first artificial satellite by the Soviet Union that stunned the Western world.”If China is catching up quickly to the US in the AI race, then the economics of AI will be turned on its head,” warned Kathleen Brooks, research director at XTB, in a note to clients.Microsoft CEO Satya Nadella took to social media hours before markets opened to argue less expensive AI was good for everyone.But last week at the World Economic Forum in Davos, Nadella warned: “We should take the developments out of China very, very seriously.”Australia’s Science Minister Ed Husic raised privacy concerns, urging users to think carefully before downloading the chatbot.”There are a lot of questions that will need to be answered in time on quality, consumer preferences, data and privacy management,” Husic told national broadcaster ABC.”I would be very careful about that. These type of issues need to be weighed up carefully.” Microsoft, an eager adopter of generative AI, plans to invest $80 billion in AI this year, while Meta announced at least $60 billion in investments on Friday.- ‘Outplayed’ -Much of that investment goes into the coffers of Nvidia, whose shares plunged a staggering 17 percent on Monday.The situation is particularly remarkable since DeepSeek, as a Chinese company, lacks easy access to Nvidia’s state-of-the-art chips after the US government placed export restrictions on them.The export controls are “driving startups like DeepSeek to innovate in ways that prioritize efficiency, resource-pooling, and collaboration,” wrote the MIT Technology Review.Elon Musk, who has invested heavily in Nvidia chips for his company xAI, suspects DeepSeek of secretly accessing banned H100 chips — an accusation also made by the CEO of ScaleAI, a prominent Silicon Valley startup backed by Amazon and Meta.But such accusations “sound like a rich kids team got outplayed by a poor kids team,” wrote Hong Kong-based investor Jen Zhu Scott on X.In a statement, Nvidia said DeepSeek’s technology was “fully export control compliant.” 

Japanese tech firms sank Tuesday following a rout on Wall Street after China’s DeepSeek chatbot upended the artificial intelligence sector and sparked questions about huge investments by US titans.The dollar rallied on a report saying Washington was considering universal tariffs on a range of goods, fanning fresh fears about a trade war.Tokyo-listed companies linked to the artificial intelligence sector tanked for a second straight day as investors tracked a rout on Wall Street that saw Nvidia crumble 17 percent, wiping more than half-a-trillion dollars off its market capitalisation.The retreat came after DeepSeek unveiled its R1 chatbot that has apparently shown the ability to match the capacity of US AI pace-setters for a fraction of the investments made by American companies. Nvidia has been the standout company that has led the drive by investors to seek out all things AI, spending vast sums of cash but seeing their share prices rocket — the US chip firm has piled on about 1,900 percent in five years.The DeepSeek bombshell also came on the heels of President Donald Trump’s announcement of a new $500 billion venture to build infrastructure for artificial intelligence in the United States.Trump said the release “should be a wake-up call for our industries that we need to be laser-focused on competing to win”.He argued that it could be a “positive” for US tech giants.”Instead of spending billions and billions, you’ll spend less, and you’ll come up with hopefully the same solution,” he said.But Sam Altman, the boss of OpenAI, which runs lead US chatbot ChatGPT, called DeepSeek “impressive”.The Nasdaq tanked more than three percent and the S&P 500 more than one percent, with another US chip-maker, Broadcom, off 17.4 percent.The selling in Tokyo extended into Tuesday, with the Nikkei off 1.4 percent. Advantest plunged more than 11 percent, while Tokyo Electron shed 5.7 five percent and Disco Corporation almost three percent.Tech investor SoftBank, which is a key investor in Trump’s AI project, tumbled more than five percent, having lost more than eight percent the day before.- Greenback rally -“The Deepseek news has triggered a rethink on the AI revolution and arguably one of the pillars of the current US exceptionalism,” said National Australia Bank’s Rodrigo Catril.”If R1 is as good as first impressions seem to suggest, then demand for sophisticated chips, infrastructure (think data centres) and energy may not be as large as originally thought.”Other Asian markets were mixed in limited trade ahead of the Lunar New Year break.Hong Kong, Singapore and Mumbai rose, though Sydney, Wellington, Manila and Bangkok dipped with Sydney barely moved.Shanghai, Jakarta, Seoul and Taipei were closed.The dollar pushed higher after the Financial Times reported that US Treasury Secretary Scott Bessent was looking to impose universal tariffs of 2.5 percent on goods initially and lifting them by the same amount each month. It said the move would give room for negotiations with the White House but the tariffs could go as high as 20 percent. The report comes after Trump rattled confidence Sunday by a row with Colombia over deportations, in which the president said he would hit the country with 25 percent levies.Bogota backed down after a short standoff, but analysts said the development highlighted the president’s willingness to weaponise tariffs.The greenback rallied against the yen, euro and sterling, while the Mexican peso and South African rand were off more than one percent each.Investors are also looking ahead to the Federal Reserve’s policy meeting this week, with hopes it will offer a fresh view of its interest rate outlook in light of Trump’s tariff warnings and pledges to slash taxes, immigration and regulations.”Data points to better inflation, continued growth but the first executive orders from the president targeting immigration could see the jobs market tighten and force up wages,” TipRanks analyst Neil Wilson said.”On tariffs, things are only just getting started. Donald Trump said he would ‘rather not’ impose new tariffs on China. But it’s hard to see things going any other way,” said Wilson.”The reality of tariffs has not been fully priced.”- Key figures around 0710 GMT -Tokyo – Nikkei 225: DOWN 1.4 percent at 39,016.87 (close)Hong Kong – Hang Seng Index: UP 0.1 percent at 20,225.11 (close)Shanghai – Composite: Closed for a holidayEuro/dollar: DOWN at $1.0437 from $1.0492 on MondayPound/dollar: DOWN at $1.2440 from $1.2496Dollar/yen: UP at 155.71 yen from 154.61 yen Euro/pound: DOWN at 83.85 pence from 83.94 penceWest Texas Intermediate: UP 0.5 percent at $73.52 per barrelBrent North Sea Crude: UP 0.5 percent at $77.48 per barrelNew York – Dow: UP 0.7 percent at 44,713.58 (close)London – FTSE 100: FLAT at 8,503.71 (close)

Fears of upheaval in the AI gold rush rocked Wall Street on Monday following the emergence of a popular ChatGPT-like model from China, with US President Donald Trump saying it was a “wake-up call” for Silicon Valley.Last week’s release of the latest DeepSeek model initially received limited attention, overshadowed by the inauguration of Trump on the same day.However, over the weekend, the Chinese artificial intelligence startup’s chatbot surged to become the most downloaded free app on Apple’s US App Store, displacing OpenAI’s ChatGPT.What truly rattled the industry was DeepSeek’s claim that it developed its latest model, the R1, at a fraction of the cost that major companies are investing in AI development, primarily on expensive Nvidia chips and software.The development is significant given the AI boom, ignited by ChatGPT’s release in late 2022, has propelled Nvidia to become one of the world’s most valuable companies.The news sent shockwaves through the US tech sector, exposing a critical concern: should tech giants continue to pour hundreds of billions of dollars into AI investment when a Chinese company can apparently produce a comparable model so economically?DeepSeek’s apparent advances were a poke in the eye to Washington and its priority of thwarting China by maintaining American technological dominance.Trump reacted quickly on Monday, saying the DeepSeek release “should be a wake-up call for our industries that we need to be laser-focused on competing to win.”He argued that it could be a “positive” for US tech giants, adding: “instead of spending billions and billions, you’ll spend less, and you’ll come up with hopefully the same solution.”The development also comes against a background of a US government push to ban Chinese-owned TikTok in the United States or force its sale.David Sacks, Trump’s AI advisor and prominent tech investor, said DeepSeek’s success justified the White House’s decision to reverse executive orders, issued under Joe Biden, that established safety standards for AI development.The regulations “would have hamstrung American AI companies without any guarantee that China would follow suit,” Sacks wrote on X.Adam Kovacevich, CEO of the tech industry trade group Chamber of Progress, echoed the sentiment: “Now the top AI concern has to be ensuring (the United States) wins.”Tech investor and Trump ally Marc Andreessen declared “Deepseek R1 is AI’s Sputnik moment,” referencing the 1957 launch of Earth’s first artificial satellite by the Soviet Union that stunned the Western world. “If China is catching up quickly to the US in the AI race, then the economics of AI will be turned on its head,” warned Kathleen Brooks, research director at XTB, in a note to clients.Microsoft CEO Satya Nadella took to social media hours before markets opened to argue less expensive AI was good for everyone.But last week at the World Economic Forum in Davos, Nadella warned: “We should take the developments out of China very, very seriously.”Microsoft, an eager adopter of generative AI, plans to invest $80 billion in AI this year, while Meta announced at least $60 billion in investments on Friday.- ‘Outplayed’ -Much of that investment goes into the coffers of Nvidia, whose shares plunged a staggering 17 percent on Monday.The situation is particularly remarkable since DeepSeek, as a Chinese company, lacks easy access to Nvidia’s state-of-the-art chips after the US government placed export restrictions on them.The esteemed Stratechery tech newsletter and others suggested that DeepSeek’s innovations stemmed from necessity, as lacking access to powerful Nvidia-designed chips forced them to develop novel methods.The export controls are “driving startups like DeepSeek to innovate in ways that prioritize efficiency, resource-pooling, and collaboration,” wrote the MIT Technology Review.Elon Musk, who has invested heavily in Nvidia chips for his company xAI, suspects DeepSeek of secretly accessing banned H100 chips — an accusation also made by the CEO of ScaleAI, a prominent Silicon Valley startup backed by Amazon and Meta.But such accusations “sound like a rich kids team got outplayed by a poor kids team,” wrote Hong Kong-based investor Jen Zhu Scott on X.In a statement, Nvidia said DeepSeek’s technology was “fully export control compliant.” 

Elon Musk’s Tesla and German auto giant BMW have challenged EU import tariffs on China-made electric vehicles at the bloc’s top court, the European Commission said Monday.The carmakers — which both manufacture EVs in China — followed challenges filed with the Court of Justice of the European Union (CJEU) by Chinese automakers BYD, Geely and SAIC against the extra tariffs of up to 35 percent.”We take note of these cases and we look forward to defending ourselves in court,” commission spokesman Olof Gill told AFP. Brussels imposed the extra tariffs on Chinese-made electric cars at the end of October after an anti-subsidy investigation concluded Beijing’s state support was unfairly undercutting European automakers.The move came as Europe’s car industry has been plunged into crisis by high manufacturing costs, a stuttering switch to electric vehicles (EV) and increased competition in key market China.But BMW said the duties “do not strengthen the competitiveness of European manufacturers” and it had thus filed the lawsuit seeking an “annulment of this regulation” in order to “protect its interests”. “The countervailing duties harm the business model of globally active companies, they limit the supply of e-cars to European customers and can therefore even slow down decarbonization in the transport sector,” the German automaker said in a statement. The EU tariffs followed a more radical US approach that saw former president Joe Biden quadrupling import tariffs on EVs from China to 100 percent, as part of a package of hikes having accused Beijing of “cheating” rather than competing.Beijing has consistently denied its industrial policies are unfair and has lodged a complaint with the World Trade Organization about the EU tariffs.It later imposed “anti-dumping measures” on brandy imported from the bloc, in what appeared to be a tit-for-tat measure.Under the EU tariff scheme, Tesla vehicles manufactured in Shanghai face an additional surcharge of 7.8 percent on top of 10 percent already in place for EV imports from China.BYD similarly faces a 17 percent surcharge, Geely 18.8 percent and SAIC 35.3 percent. – Growing share -The German government was one of five EU member states that opposed the measures, fearing retaliation against its own manufacturers.The country’s automotive flagships, including BMW, are strongly established in China, where they produce certain models, including for the European market.Similarly, US automaker Tesla produces its famous Model 3 in its Shanghai factory and exports it to Europe.BMW said it hoped a political agreement could be sought through negotiation, adding that it was “important to avoid a trade conflict that only has losers in the end.”Tesla-owner Musk is a key ally and adviser to US President Donald Trump, who has sent trade tensions soaring worldwide since being elected in November by threatening to impose extra customs duties on allies and rivals including the EU and China.The complaints by the five manufacturers were filed with the General Court, the lower CJEU chamber, last week. They are listed on the website of the Luxembourg-based institution, which does not provide any other detail. Gill confirmed to AFP they concerned the EU’s new customs duties.Europe’s auto sector employs more than 13 million people and accounts for about seven percent of the 27-nation bloc’s GDP.The market share of Chinese electric cars has ballooned in the EU in recent years, 14 percent in the second quarter of 2024, up from less than 2 percent in 2020. The share of Chinese-built vehicles, including those manufactured by foreign brands like Tesla, similarly rose to 27.2 percent from 3.5 percent over the same period. European automotive CEOs and EU officials are expected to discuss the sector’s troubles on Thursday in the first meeting held under a new initiative chaired by EU chief Ursula von der Leyen.

Fears of upheaval in the AI gold rush rocked Wall Street on Monday following the emergence of a popular ChatGPT-like model from China, triggering predictions of turmoil for Silicon Valley and accusations of cheating.Last week’s release of the latest DeepSeek model initially received limited attention, overshadowed by the inauguration of US President Donald Trump on the same day.However, over the weekend, the Chinese artificial intelligence startup’s chatbot surged to become the most downloaded free app on Apple’s US App Store, displacing OpenAI’s ChatGPT.What truly rattled the industry was DeepSeek’s claim that it developed its latest model, the R1, at a fraction of the cost that major companies are investing in AI development, primarily on expensive Nvidia chips and software.This development is significant given that the AI boom, ignited by ChatGPT’s release in late 2022, has propelled Nvidia to become one of the world’s most valuable companies.The news sent shockwaves through the US tech sector, exposing a critical concern: should tech giants continue to pour hundreds of billions of dollars into AI investment when a Chinese company can apparently produce a comparable model so economically?DeepSeek was a poke in the eye to Washington and its priority of thwarting China by maintaining American technological dominance.Trump reacted quickly on Monday, saying the DeepSeek release “should be a wake-up call for our industries that we need to be laser-focused on competing to win.”The development also comes against a background of a US government push to ban Chinese-owned TikTok in the United States or force its sale.David Sacks, Trump’s AI advisor and prominent tech investor, said DeepSeek’s success justified the White House’s decision to reverse Biden-era executive orders that had established safety standards for AI development.These regulations “would have hamstrung American AI companies without any guarantee that China would follow suit” which they obviously wouldn’t, Sacks wrote on X.Adam Kovacevich, CEO of the tech industry trade group Chamber of Progress, echoed this sentiment: “Now the top AI concern has to be ensuring (the United States) wins.”Tech investor and Trump ally Marc Andreessen declared “Deepseek R1 is AI’s Sputnik moment,” referencing the 1957 launch of Earth’s first artificial satellite by the Soviet Union that stunned the Western world. The situation is particularly remarkable since, as a Chinese company, DeepSeek lacks access to Nvidia’s state-of-the-art chips used to train AI models powering chatbots like ChatGPT.Exports of Nvidia’s most powerful technology are blocked by order of the US government, given the strategic importance of developing AI.”If China is catching up quickly to the US in the AI race, then the economics of AI will be turned on its head,” warned Kathleen Brooks, research director at XTB, in a note to clients.Microsoft CEO Satya Nadella took to social media hours before markets opened to dismiss concerns about cheaply-produced AI, saying less expensive AI was good for everyone.But last week at the World Economic Forum in Davos, Nadella warned: “We should take the developments out of China very, very seriously.”Microsoft, an eager adopter of generative AI, plans to invest $80 billion in AI this year, while Meta announced at least $60 billion in investments on Friday.- ‘Outplayed’ -Much of that investment goes into the coffers of Nvidia, whose shares plunged a staggering 17 percent on Monday. Adding to the turmoil, the esteemed Stratechery tech newsletter and others suggested that DeepSeek’s innovations stemmed from necessity, as lacking access to powerful Nvidia-designed chips forced them to develop novel methods.The export controls are “driving startups like DeepSeek to innovate in ways that prioritize efficiency, resource-pooling, and collaboration,” wrote the MIT Technology Review.Elon Musk, who has invested heavily in Nvidia chips for his company xAI, suspects DeepSeek of secretly accessing banned H100 chips — an accusation also made by the CEO of ScaleAI, a prominent Silicon Valley startup backed by Amazon and Meta.But such accusations “sound like a rich kids team got outplayed by a poor kids team,” wrote Hong Kong-based investor Jen Zhu Scott on X.In a statement, Nvidia said DeepSeek’s technology was “fully export control compliant.”