Tech stocks in Asia rebounded on Wednesday, shaking off investor fears over Chinese AI startup DeepSeek. The surge followed a strong overnight performance on Wall Street, as market sentiment shifted towards the belief that DeepSeek’s low-cost AI model wouldn’t undermine Nvidia and other U.S. chipmakers.
How Asian markets responded to AI concerns
Japan’s Nikkei 225 index rose 0.5%, breaking a three-day losing streak. Australia’s S&P/ASX 200 index climbed 0.8%, with its tech subindex jumping 2.2%. Trading in mainland China, Hong Kong, Taiwan, Singapore, and South Korea was halted due to Lunar New Year holidays, leaving limited regional activity.
The Nasdaq Composite had previously plunged over 3% on concerns about DeepSeek’s impact on AI-driven valuations but rebounded 2% overnight. The S&P 500 also gained 0.9%. U.S. stock futures saw slight declines of 0.1% in pre-market trading.
Analysts suggest the market correction was driven by reassessments of DeepSeek’s scalability. “While ostensibly impressive, DeepSeek will either lack the scalability to truly disrupt the AI space or, if anything, increase demand for GPUs,” said Kyle Rodda, a senior analyst at Capital.com.
Market focus shifts to major earnings reports
Investor attention now turns to earnings from major U.S. tech firms, with Meta, Microsoft, and Tesla set to report later in the day. The results will be closely watched for insights into AI investments and infrastructure spending.
Apple will follow with its earnings release on Thursday, adding to a pivotal week for the so-called “Mag 7” tech giants. Questions surrounding capital expenditures on computing power, particularly for AI workloads, are expected to dominate earnings calls.
Meanwhile, the Federal Reserve is set to announce its policy decision, with markets widely anticipating no change in interest rates. Traders currently price in a rate cut in June, with another expected before year-end.
Trump tariffs add uncertainty to global markets
Market sentiment remains cautious as U.S. President Donald Trump weighs fresh tariffs on China. While Trump recently signaled a softer stance following a “friendly” call with Chinese President Xi Jinping, the White House confirmed tariffs on Canada and Mexico will take effect Saturday.
The U.S. dollar index remained stable at 107.91 after two consecutive days of gains, benefiting from risk-off sentiment and shifting tariff expectations. The Mexican peso slipped to 20.5440 per dollar, while Canada’s loonie held steady at C$1.4402.
Oil prices maintained their recent gains, with Brent crude futures trading at $77.47 per barrel, while U.S. West Texas Intermediate crude futures edged up to $73.82 per barrel.
Despite AI-driven volatility, global markets now shift their focus to earnings, central bank decisions, and tariff developments, all of which could set the tone for trading in the weeks ahead.
Featured image credit: Koushalya Karthikeyan/Unsplash
