Nvidia Slides $600bn as DeepSeek AI Shakes Tech Rally

Nvidia’s $600 billion market value loss on Monday highlighted the disruptive potential of DeepSeek's low-cost AI model, which has prompted investors to reassess spending across the AI sector. European markets largely avoided the selloff, while German software giant SAP reported better-than-expected earnings, driven by cloud growth, and Japan’s Advantest fell 11% amid supply chain concerns. Traders are also bracing for policy decisions later in the week from the Federal Reserve and European Central Bank, as well as earnings from Boeing, Starbucks, and General Motors today.

Equities

The FTSE 100 was flat on Monday, holding near its record high from Friday. Industrial metal miners weighed on the index, with Anglo American dropping 6.2% following reports that BHP Group would not make a renewed bid for the company. Weaker copper prices also pressured the sector.

Cigarette manufacturers performed strongly, with British American Tobacco rising 4.7% and Imperial Brands gaining 1.4%. This followed news that the Trump administration in the United States had withdrawn plans to ban menthol cigarettes. S

In the United States, the Nasdaq fell 3.1%, its largest one-day percentage drop since December, as Nvidia led a selloff in chipmakers. Nvidia tumbled 17%, erasing $593 billion in market value, the biggest single-day loss ever recorded by a company on Wall Street. The selloff was triggered by concerns over a new Chinese AI model from startup DeepSeek, which offers a low-cost alternative and has quickly overtaken ChatGPT in downloads. The semiconductor index fell 9.2%, its sharpest decline since March 2020.

Other major technology companies also fell. Microsoft’s shares dropped 2.1%, while Alphabet, the parent company of Google, slid 4.2%. AI server manufacturer Dell Technologies saw an 8.7% decline. Data centre operator Digital Realty also dropped 8.7%. These declines came as investors questioned whether the AI-driven demand for semiconductors and related technologies could continue at expected levels.

The S&P 500 fell 1.5%, while the Dow Jones bucked the trend, rising 0.7%, supported by gains in other sectors. Utilities in the United States also fell sharply, with Vistra losing 28.3%.

Forex & Commodities

The Japanese yen strengthened 0.87% to 154.63 against the US dollar on Monday, briefly reaching 153.71, its strongest level since mid-December, while the Swiss franc rose 0.50% to $0.90155 as investors moved to safe-haven assets. The US dollar index fell 0.29% to 107.36, hitting its lowest since mid-December, with the euro steady at $1.0491. The Mexican peso weakened by 2% to 20.693 per dollar, pressured by tariff concerns, while the Canadian dollar fell 0.22% to 1.44 per dollar.

Gold steadied on Tuesday after dropping more than 1% on Monday, its largest daily decline in over a month. Spot gold was at $2,739.28 per ounce, while US gold futures rose 0.2% to $2,742.50. Investors are watching the Federal Reserve's policy meeting starting Tuesday, with interest rates expected to remain unchanged. Analysts suggest any signals of future rate cuts could support gold, with $2,800 seen as a potential near-term target.

Oil prices rose slightly but remained near two-week lows. Brent crude gained 0.78% to $77.68 per barrel, while US West Texas Intermediate increased 0.68% to $73.67. Weaker-than-expected manufacturing data from China, showing contraction in January, added to concerns about demand, while new US sanctions on Russian oil trade disrupted supplies to Chinese refineries. In the US and Europe, warmer-than-normal temperatures reduced demand for heating fuels, adding further pressure on energy markets.