DeepSeek Jitters and Tariff Worries Roil US Markets

28 Jan 2025 , 11:34 AM

As investors considered the possible ramifications of a Chinese startup’s free open-source artificial intelligence model, the Japanese yen relinquished some of the gains that were driven by safe havens on Tuesday. Meanwhile, the euro was under pressure from new tariff concerns.

The rise of China’s DeepSeek free AI assistant, which it claims utilizes cheaper processors and less data, caused a widespread shakeout in financial markets overnight, but the U.S. currency recovered.

The new AI model opens a new tab and triggers a sell-off in shares in a broad risk-off move, threatening to upend popular bets that have previously buoyed shares of U.S. technology giants, particularly chipmaker Nvidia.

As the yen surged to its highest level since mid-December at 153.715 on Monday due to safe-haven bids, the dollar was up 0.7% vs the yen at 155.70, bringing the currency pair back within its previous trading range.

Technology companies were the main cause of Monday’s 1.46% decline in the benchmark S&P 500. The greatest single-day loss for any Wall Street company occurred when AI pioneer Nvidia fell 17%, wiping off almost $593 billion in stock market value.

As investors looked for safer assets, the yield on the benchmark 10-year Treasury note fell to a one-month low of 4.561% on Monday, offering little relief for the dollar.

For feedback and suggestions, write to us at [e-mail]