Nasdaq Futures Tumble as China AI Rival DeepSeek Emerges

Nasdaq futures dropped 1.8% after Chinese startup DeepSeek unveiled a potential ChatGPT rival, claiming lower costs and superior performance on some metrics, unsettling US tech investors. Mexico’s peso fell 1.2%, and Canada’s dollar slipped 0.3% as tariff tensions flared, with the US reversing sanctions on Colombia after a diplomatic agreement. The Magnificent Seven tech giants, including Apple, Microsoft, Meta, and Tesla, will report earnings this week, while central banks, including the Fed and ECB, prepare for key policy meetings.

Equities

The FTSE 100 slipped 0.7% on Friday, weighed down by a stronger sterling, which dented export-focused firms like Shell and HSBC. Despite the decline, the index remained on track for its fifth consecutive weekly gain, supported earlier in the week by optimism around US economic policies. Sterling reached a two-week high against the dollar amid uncertainty around tariff plans, further pressuring globally oriented stocks.

Burberry surged 10% after reporting better-than-expected quarterly sales, boosted by a strong US holiday season. The luxury retailer also expressed confidence in achieving a profit for the financial year. The news lifted shares of European peers, including Kering and LVMH.

Diageo rose 4.3% following reports that it may sell or spin off its Guinness beer brand and review its stake in LVMH. UK-listed miners like Glencore, Antofagasta, and Rio Tinto also gained as copper prices climbed, supported by hopes of a US-China trade deal.

In the US, the S&P 500 fell 0.29%, with technology stocks leading losses. Nvidia dropped 3.1%, reversing earlier gains, while Texas Instruments fell 7.2% after issuing a weaker-than-expected profit forecast. Microsoft and Tesla also declined, losing 0.6% and 1.4%, respectively. The Dow Jones Industrial Average dropped 0.32%, dragged down by a 1.4% decline in Boeing after it warned of a $4 billion fourth-quarter loss. American Express also slipped 1.4% despite reporting a 12% rise in quarterly profit.

Verizon stood out with a 0.9% gain after posting stronger-than-expected subscriber additions. In utilities, NextEra Energy climbed 5.2%, marking the largest gain within the S&P 500, while six out of 11 S&P sectors posted gains overall.

The Nasdaq fell 0.5%, although both the Nasdaq and S&P 500 recorded their second straight week of gains. The indexes have been bolstered by earlier optimism around technology stocks but saw pullbacks on Friday as investors reassessed mixed economic data and corporate earnings.

Forex & Commodities

The US dollar strengthened, recovering from its weakest week in over a year, as tariff concerns re-emerged following trade tensions between the US and Colombia. While the Colombian peso faced pressure, the Mexican peso fell 0.7% to 20.409 per dollar amid uncertainty over potential tariffs on Mexico and Canada. The euro dipped 0.2% to $1.0467, and the pound traded at $1.2450, impacted by expectations of a European Central Bank rate cut this week. Meanwhile, the Japanese yen held steady at 155.88 per dollar after the Bank of Japan raised interest rates and revised inflation forecasts.

Gold prices dropped, with spot gold falling 0.7% to $2,751.71 per ounce, pressured by the stronger dollar. US gold futures were down 0.8% at $2,756.30. The Fed is widely expected to leave interest rates unchanged this week, with markets closely watching for any signals on future rate cuts. Rising Treasury yields, driven by inflation concerns and tariff uncertainty, added to the downward pressure on gold.

Oil prices also declined, with Brent crude slipping 0.45% to $78.15 a barrel and US West Texas Intermediate crude down 0.54% at $74.26. President Trump’s renewed calls for OPEC to lower oil prices and his threats of sanctions on Russia and other oil-producing nations weighed on markets. However, tensions eased slightly after the US averted trade sanctions on Colombia.