Financial markets are beginning to stabilize after the initial turmoil caused by DeepSeek’s emergence. U.S. technology stocks rebounded yesterday, following Monday’s steep losses, as investors adjusted to the reality of China’s new AI contender. Described as faster, more efficient, and cheaper—at least on paper—DeepSeek has sparked both intrigue and controversy.
Microsoft and OpenAI have raised concerns, suspecting that DeepSeek may have trained on OpenAI’s data, an allegation they find deeply troubling. The irony is hard to miss: the same companies that have been mining global data for their own AI models are now protesting. Amid this ethical tangle, one overlooked group remains caught in the crossfire—content creators, whose work continues to fuel the AI arms race.
Despite Monday’s 3% drop fueled by fears over AI investments, the Nasdaq has already reversed course, regaining half its losses. Nvidia, a bellwether for the AI sector, saw its stock plummet 17% before rebounding 9% yesterday. Analysts worked overtime to reassure investors that Chinese AI doesn't upend the entire ecosystem but rather intensifies the ongoing battle—one that will always depend on chips, data centers, and energy. Their message seems to have landed, at least in the short term.
In Europe, markets fared relatively well, except in Paris, where Schneider Electric continued its decline. The AI-driven rebound bypassed the French company, despite its key role in supplying data centers and energy management solutions.
All Eyes on the Federal Reserve
Today, attention shifts from DeepSeek to the Federal Reserve, which is set to announce its interest rate decision at 2:00 PM ET. Markets widely expect the Fed to maintain rates within the 4.25%–4.50% range, currently at 4.33%. However, investors will be listening closely for any hints of a potential rate cut at the next meeting on March 19. According to CME’s FedWatch tool, the odds of a March cut stand at 34%. Any dovish signals from Fed Chair Jerome Powell could push that probability higher, providing a boost to stock prices.
Tech Earnings Take Center Stage
Once the Fed’s decision is absorbed, market focus will shift to earnings reports from Microsoft, Meta Platforms, and Tesla. Elon Musk faces the challenge of justifying Tesla’s lofty valuation, while Microsoft and Meta must convince investors that their heavy spending on large language models (LLMs) will eventually pay off. The evening promises to be pivotal for the tech sector.
Politics and Global Markets
Meanwhile, Donald Trump is back in the headlines, echoing themes from his first term. The latest controversy revolves around customs surcharges and his aggressive stance on federal spending. A judicial panel has blocked the White House’s executive order freezing billions in federal grants and loans intended for education and healthcare initiatives.
On the global front, the European Union is preparing to phase in an embargo on Russian aluminum imports, a move that could have significant geopolitical and economic implications.
Asia-Pacific and European Markets
In Asia-Pacific, many markets remain closed for the Lunar New Year, including mainland China, Hong Kong, South Korea, Taiwan, and Singapore. However, trading continues in Japan, Australia, and India, where major indices are up about 0.5% this morning.
In Europe, the Stoxx Europe 600 is also up 0.5%, while U.S. futures are slightly in the red ahead of the Fed’s decision.
With market forces shifting rapidly and key decisions on the horizon, today is shaping up to be another eventful day in global finance.
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