The National Times - Stocks slide on Chinese AI threat

Stocks slide on Chinese AI threat


Stocks slide on Chinese AI threat
Stocks slide on Chinese AI threat / Photo: © AFP

European and Asian stock markets mostly slid Monday and Wall Street was forecast to open sharply lower on talk that a cheaper Chinese generative AI programme can outperform big-name rivals, notably in the United States.

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President Donald Trump's threat to impose huge tariffs on Colombia in retaliation for its refusal to accept deportation flights from the United States was also unsettling markets.

The fear is that Trump could go full throttle also with tariffs planned for China and other major trading partners.

"US markets are likely to take centre stage today as a slump in the tech sector puts pressure on wider markets," noted Joshua Mahony, analyst at traders Scope Markets.

- Eyes on DeepSeek -

Wall Street already took a hit Friday following the launch of the Chinese DeepSeek artificial intelligence programme last week.

The firm said only $5.6 million was spent developing the model.

The programme's arrival has sparked competition fears, as US tech titans -- including Nvidia, Meta and Alphabet -- have made huge investments worth hundreds of billions of dollars into AI products that has sent their valuations soaring.

The US tech sector saw sharp falls Monday in stocks futures trading ahead of Wall Street's reopening.

Just last week following his inauguration, Trump announced a $500-billion venture to build infrastructure for AI in the United States.

Tech and chip firms were among the big losers in Tokyo on Monday as the Nikkei ended in negative territory, with Advantest down more than eight percent and Tokyo Electron off almost five percent.

SoftBank, which is a key investor in Trump's AI project, tumbled more than eight percent.

The week also sees earnings from US big tech and interest-rate decisions from the Federal Reserve and European Central Bank, ahead of American inflation data.

Equities enjoyed a healthy run-up last week on the hope that Trump's second administration would take a less hardball approach to global trade as he held off imposing stiff levies on China and other partners immediately on taking office, as he warned he would.

His comments that he would "rather not" hit Beijing, and a signal of openness to a trade deal added to the optimistic tone.

However, news Sunday that he would hit Colombian goods with a 25 percent tariff -- rising to 50 percent next week -- and revoke the visas of government officials set off alarm bells.

The move came after President Gustavo Petro blocked deportation flights from the United States.

In response to Trump's decision, Petro initially announced retaliatory levies of 25 percent on imports from the United States.

But Bogota later backed down and agreed to accept the deported citizens, with Foreign Minister Luis Gilberto Murillo saying they had "overcome the impasse".

"Actions speak louder than words. The situation with Colombia just shows how little it takes for Trump to use tariffs as a negotiation tool," said Dane Cekov at Sparebank 1 Markets.

Gold -- a haven investment in times of economic uncertainty -- sat Monday just shy of its record high.

- Key figures around 1100 GMT -

London - FTSE 100: DOWN 0.3 percent at 8,480.22 points

Paris - CAC 40: DOWN 1.0 percent at 7,852.04

Frankfurt - DAX: DOWN 1.4 percent at 21,101.03

Tokyo - Nikkei 225: DOWN 0.9 percent at 39,565.80 (close)

Hong Kong - Hang Seng Index: UP 0.7 percent at 20,197.77 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,250.60 (close)

New York - Dow: DOWN 0.3 percent at 44,424.25 (close)

Euro/dollar: UP at $1.0505 from $1.0500 on Friday

Pound/dollar: UP at $1.2497 from $1.2484

Dollar/yen: DOWN at 154.02 yen from 155.93 yen

Euro/pound: UP at 84.07 pence from 84.06 pence

Brent North Sea Crude: UP 0.2 percent at $78.69 per barrel

West Texas Intermediate: UP 0.2 percent at $74.80 per barrel

N.Roberts--TNT