U.S. stock futures and Asian markets declined Monday as Chinese startup DeepSeek AI rolled out a free, open-source AI model competitive with the OpenAI product ChatGPT. The move has raised concerns over U.S. tech hegemony and global competition in the development of AI.
Nasdaq Composite futures lost 1.8 percent, and S&P 500 futures lost 0.9 percent, which reflected the nervous investor. Nikkei declined 0.3 percent in Asia, while New Zealand’s benchmark slipped 0.6 percent. Hong Kong’s Hang Seng Index, however, rose 0.9 percent, and mainland Chinese stocks were up modestly.
DeepSeek’s AI, built on a smaller budget than its peers in the U.S., outperformed on global benchmarks. That challenges the notion of the technological lead the U.S. has. “This indicates China’s potential for innovation despite restrictions from the U.S.,” said IG strategist Yeap Jun Rong.
The dollar advanced against many currencies, 0.3 percent against the yuan and 0.4 percent against the Australian dollar. Yet oil prices were lower, down 1.2 percent to $77.60 a barrel in Brent crude after U.S. President Donald Trump renewed demands on OPEC to cut prices.
Gold fell 0.6 percent, while Bitcoin lost 3.5 percent to $101,415.12. Meanwhile, an AI assistant created by DeepSeek shot to the top of the charts for iPhone downloads, highlighting just how much of a disruptor the startup may be.
The success of DeepSeek’s model is the first signal for a shift in the AI landscape. The cost-effective innovations are changing the game of established giants like OpenAI. This shift may change global technology strategies because companies are seeking more affordable and efficient AI solutions.
The markets are expecting more volatility this week, which is likely to be important because both the Federal Reserve and the European Central Bank will make critical decisions on monetary policies. The global AI race will significantly determine the future of the tech and economic landscape, where developments like DeepSeek will set the tone for the times to come.
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