US technology stocks remained volatile on Wall Street after Monday’s heavy sell-off sparked by the launch of a new popular Chinese version of ChatGPT, in a challenge to US dominance in the artificial intelligence race.

Shares in Nvidia, a leading US maker of the computer chips that power AI models, see-sawed: they fell a further 2% before trading slightly higher, up a little over 2% at time of writing. This came after Monday’s near-17% slump that wiped nearly $600bn off its market value, in the biggest single day market cap loss in history.

The tech-heavy Nasdaq rose by 0.9% following Monday’s 3% drop, while the broader S&P 500 gained about 0.5%.

Donald Trump has said that the launch of a chatbot by China’s DeepSeek is a “wake-up call” for US tech firms in the global race to dominate artificial intelligence.

Experts have urged caution over rapidly embracing the Chinese artificial intelligence platform DeepSeek, citing concerns about it spreading misinformation and how the Chinese state might exploit users’ data.

Here are today’s other main stories:

Experts have urged caution over rapidly embracing the Chinese artificial intelligence platform DeepSeek, citing concerns about it spreading misinformation and how the Chinese state might exploit users’ data.

The new low-cost AI wiped $1tn off the leading US tech stock index this week and it rapidly became the most downloaded free app in the UK and the US. Donald Trump called it a “wake-up call” for tech firms.

Its emergence has shocked the tech world by apparently showing it can achieve a similar performance to widely used platforms such as ChatGPT at a fraction of the cost.

Michael Wooldridge, a professor of the foundations of AI at Oxford University, said it was not unreasonable to assume data inputted into the chatbot could be shared with the Chinese state.

He said:

I think it’s fine to download it and ask it about the performance of Liverpool football club or chat about the history of the Roman empire, but would I recommend putting anything sensitive or personal or private on them? “Absolutely not … Because you don’t know where the data goes.

US technology stocks have reversed their early gains, and Nvidia is now down by 1.5%, while Super Micro Computer has lost a further 4%, following yesterday’s heavy losses.

In Europe, the Dutch chipmaking equipment manufacturer ASML is down by 1.2%.

But, as Russ Mould, investment director at the stockbroker AJ Bell, pointed out, Nvidia’s near-17% plunge on Monday

only pulled the stock back to October 2024 levels. Someone who has owned Nvidia shares since before summer last year should still be sitting on decent gains, even after yesterday’s pullback.

US stocks have made modest gains after yesterday’s rout sparked by China’s AI push, as Wall Street opened.

AI-linked stocks rose, recouping some of yesterday’s heavy losses, with chipmaker Nvidia up 2.1% (versus Monday’s 17% drop), Broadcom rising nearly 1%, Super Micro up 1.6% and Arm up 2%.

• Nasdaq up 79 points, or 0.4%, at 19,420

• S&P 500 up 12.9 points, or 0.2%, at 6,025

• Dow Jones up 4 points, or 0.01%, at 44,717

Donald Trump has said that the launch of a chatbot by China’s DeepSeek is a “wake-up call” for US tech firms in the global race to dominate artificial intelligence.

The emergence of DeepSeek, which has built its R1 model chatbot at a fraction of the cost of competitors such as OpenAI’s ChatGPT and Google’s Gemini, wiped $1tn (£800bn) in value from the leading US tech index on Monday.

Orders for durable goods in the United States have fallen unexpectedly.

Orders for manufactured goods fell by 2.2% in December, against expectations of a 0.6% rise, while November’s decline was revised lower to 2% from 1.2%, according to the Census Bureau.

New orders fell by 2.4% excluding defence, and increased by 0.3% excluding transportation.

🇺🇸 US Durable Goods: Durable goods 1σ Miss, Ex-trans In-line, Nondef & ex-air Beat, Shipments 3σ Beat

Market moves: $EURUSD up 1 pips to 1.0429, US 2y yield ~unch

*US DURABLE GOODS NEW ORDERS: -2.2 (Est. 0.6, 1σ miss) vs. -1.2 last. Lowest since Jun 24

*US DURABLE NEW ORDERS… pic.twitter.com/xFE0Dahqc1

— Econ Flare (@EconFlare) January 28, 2025

Boeing has reported its second-biggest annual loss ever after a tough year when it battled to restore stability at its production lines after a harrowing mid-air accident, and faced a crippling strike by US West Coast factory workers.

The US planemaker fell deep into the red with a 2024 loss of $11.8bn, its largest since 2020. A bitter seven-week strike, which halted most jet production, ended in early November, deepening its financial crisis.

Chief executive Kelly Ortberg is battling to turning around the planemaker as it loses more ground to European rival Airbus in the aircraft delivery race and comes under the scrutiny of regulators and customers amid safety fears.

Ortberg, who took the helm in August, said the company was making progress at its production lines. The company posted a loss of $3.9bn in the fourth quarter alone, with revenues down by 31% to $15.2bn, below analysts’ expectations.

Ortberg reiterated the company’s four-part plan to turn the business around including undertaking a “multi-year journey” to fix Boeing‘s culture, “perhaps the most important change we need to make”.

After banking record-high profits in the 2010s, Boeing has lost more than $30bn since 2019 after two fatal crashes of its best-selling 737 Max jet triggered production quality and safety concerns, and worries that it had misled regulators during the plane’s certification process.

The company took a further hit during the Covid-19 pandemic, and the mid-air panel blowout on a nearly new 737 Max a year ago sparked another crisis.

Ortberg said Boeing has made progress with its supply chain and returned to an output rate of five 787 jets a month at the end of 2024, despite delays in areas like seats.

Ortberg was guarded in his message about the status of solving problems with anti-icing systems on the 737 Max 7 and 737 Max 10 models. The company is “still working through the testing phase focusing on finalisation of the anti-icing design solution,” he said.

The company continues to invest in “core businesses while streamlining our portfolio in areas that are not core to our future,” he added.

Union members working at the Civil Aviation authority (CAA) will take strike action next Thursday in a dispute over pay.

Around 400 members of the Prospect union are involved in the dispute across several sites, but the only picket will be at the CAA’s headquarters in Crawley/Gatwick, with a 24-hour strike planned on 6 February.

Industrial action short of a strike, which has been ongoing since 20 January – namely working to rule and an overtime ban – will pause for the duration of the strike, resuming on 7 February. This ongoing action short of a strike could cause delays across the industry to things like fleet refits, the introduction of new models, licensing of new hanger facilities, the union said.

The CAA imposed a pay offer worth 3%-4% on staff after “going through the motions of negotiating – an offer which neither kept pace with the industry nor civil service,” Prospect said. The CAA is a non-departmental public body.

Rachel Curley, deputy general secretary of Prospect, said:

Despite our ongoing industrial action the CAA has still not come to the table with an offer our members can accept so we have no choice but to escalate to a day’s strike.

There is still time to avoid further industrial action which will be damaging for the industry but the employer needs to restart good faith negotiations.

This is not an issue that is going to just go away and if it continues it will start to impact airlines causing delays to planned upgrades with a knock-on effect felt by passengers.

73% of those who voted backed strike action, and 27% voted against, while 94% voted in favour of taking action short of a strike, and 6% against. Turnout was over the legal threshold.

European shares are pushing higher and briefly touched a record high, and one analyst described the UK’s FTSE 100 index as an “island of calm”.

The pan-European Stoxx 600 rose by 0.7%, narrowly beating an intra-day all-time high hit on 24 January, led by retailers such as JD Sports, Kingfisher, which owns B&Q, Castorama, Screwfix, and Brico Dépôt, and Howden.

The European technology index, which took a hit yesterday amid the global tech rout, has bounced back with a near-1% rise. The Dutch manufacturer of chipmaking equipment ASML has gained 0.7%, after yesterday’s 7% tumble.

The FTSE 100 index in London has gained 49 points, or 0.6%, to 8,553 while the German, Italian and Spanish markets are up between 0.5% and 0.7%.

It looks like the Wall Street tech meltdown was short-lived as Nvidia’s shares are trading 4% higher in pre-market trading and futures prices point to small gains for both the Nasdaq and broader S&P 500 today.

Russ Mould, investment director at the stockbroker AJ Bell, said:

Nvidia crashed by nearly 17% which sounds dramatic but only pulled the stock back to October 2024 levels. Someone who has owned Nvidia shares since before summer last year should still be sitting on decent gains, even after yesterday’s pullback.

The DeepSeek shock has reminded investors they cannot be complacent when trying to play the AI trend. Stocks do not travel in unison and neither do they always travel upwards. Sometimes it’s good to be reminded of this. Valuations have been getting lofty in the tech space and investors need to appreciate that richly priced stocks can fall hard on the slightest bit of bad news.

The FTSE 100 continued to be an island of calm, pushing ahead as investors lapped up its plethora of defensive stocks. Utilities and healthcare were in demand, implying that investors were keen to ensure portfolios had some support in case of another tech-related wobble.

Yields on government bonds rose slightly, following yesterday’s declines, as investors await the US Federal Reserve and European Central Bank policy meetings. The Fed is expected to hold interest rates steady tomorrow while the ECB is set to cut borrowing costs by a quarter point on Thursday.

The yield, or interest rate, on the 10-year German bond, the eurozone benchmark, rose by 2 basis points, following yesterday’s 4bps decline.

US stock market futures point to a higher open on Wall Street later, with Nvidia – battered yesterday by China’s AI push – rising by 5% in pre-market trading, while other technology stocks have also bounced back.

The popularity of China’s DeepSeek’s new AI app led to a rout in US markets yesterday. AI chip leader Nvidia plunged by 17%, wiping nearly $600bn off the company’s market value, the biggest daily loss for any company. The shares are 5.1% higher in pre-market trading, while other AI-linked stocks have also recovered some ground, with Oracle up 3.3% (down nearly 14% yesterday) and Broadcom rising 4.1%, after losing 17.4% yesterday.

The Nasdaq is expected to open about 0.6% higher while the broader S&P 500 is set to rise by 0.3% at the open.

The “Magnificent 7” members Microsoft, Facebook parent Meta, Apple and Tesla are all due to report corporate results in the next couple of days.

Joshua Mahony, chief market analyst at Scope Markets, said:

Looking ahead, all eyes will remain firmly planted on the US tech names, following a session that saw Nvidia lose a record $589bn of its market capitalisation. That decline also pushed Nvidia into the third spot behind Apple and Microsoft after just four days of being heralded as the world’s most valuable company.

The timing of this week’s news will not be lost on many in the markets, with four of the Mag7 names reporting over the course of Wednesday and Thursday. Undoubtedly, we will see many adjust their statements to shed light on how new developments could drastically reduce capital expenditure going forward. However, it is important to weigh up the possibility that Nvidia chips remain a key component of the DeepSeek repertoire, and thus the idea that all development can be done on a shoestring budget remains unproven for the time being.

Halfords shares jumped as much as 20% after the UK bike and car products retailer reported robust holiday sales and upgraded its profit outlook.

Halfords said Christmas gifting contributed to 13.1% like-for-like sales growth in its cycling division in December, while colder weather in recent weeks had helped its motoring products with like-for-like sales growth of 5.5% in January.

The 133-year-old retailer said:

In recent months we have seen an improvement in trading alongside continued progress on a number of key initiatives, including our pricing and promotion strategies and cost reduction measures.

Halfords said it is on track to exceed its target of £30m in annual cost savings, and as a result expects to make an underlying pre-tax profit of £32-37m for the year to the end of March. Analysts, on average, are expecting a profit of £28.3m.

However, the company, whose stores sell bicycles, accessories and car parts, and which also has garages, mobile vans and home delivery services, warned that changes to Britain’s minimum wage and national insurance contributions would add direct labour costs of £23m for the year to March 2026.

It said:

While the impact of changes to the minimum wage and national insurance contributions are relatively easy to quantify ... their effects on the demand environment and health of the broader economy are harder to predict.

Halfords was founded as a wholesale ironmonger by Frederick Rushbrooke in Birmingham in 1892 (the company takes its name from Halford Street, where Rushbrooke opened a store in 1902 and started selling cycling goods)

Smiths Group is at the bottom of the FTSE 100 index after the UK engineering firm said it had been hit by a cyber attack.

The shares fell by as much as 2.3% and are now down by 1.4%, as Smiths said it was managing a cyber security incident that involved unauthorised access to its systems.

The company, known for making baggage-screening kits and explosive detectors, said it had isolated the affected systems as soon as it became aware of the attack. It said:

Smiths is working with cyber security experts to recover affected systems and determine any wider impact on the business.

Despite its popularity with international users, DeepSeek’s AI app appears to censor answers to sensitive questions about China and its government.

Chinese generative AI must not contain content that violates the country’s “core socialist values”, according to a technical document published by the national cybersecurity standards committee. That includes content that “incites to subvert state power and overthrow the socialist system”, or “endangers national security and interests and damages the national image”.

Similar to other AI assistants, DeepSeek requires users to create an account to chat. Its interface is intuitive and it provides answers instantaneously, except for occasional outages, which it attributes to high traffic.

We asked DeepSeek’s AI questions about topics historically censored by the great firewall. Here’s how its responses compared to the free versions of ChatGPT and Google’s Gemini chatbot.

Technology stocks are recovering after the rout of the last couple of days.

Shares of US chipmaker Nvidia, the poster child of the AI boom in recent years, are up by nearly 6% in Frankfurt, after plunging by 17% on Wall Street yesterday.

Oracle shares rose by 3.4% and AI data analytics firm Palantir gained nearly 3%. The Dutch maker of chipmaking equipment, ASML, edged up by 0.46% following yesterday’s 7% decline.

OpenAI’s chief executive Sam Altman, who runs the AI firm behind ChatGPT, said in a social media post yesterday:

We will obviously deliver much better models and also it’s legit invigorating to have a new competitor.

European stock markets have opened cautiously higher.

The FTSE 100 index has opened 0.26% higher at 8,525, up 22 points after ending flat on Monday. The pan-European Stoxx 600 index also rose by 0.2%.

Germany’s was up 0.4% in early trading and Italy’s FTSE MiB gained 0.1%, while France’s CAC edged 0.1% lower and Spain’s Ibex slipped by 0.2%.

Derren Nathan, head of equity research at Hargreaves Lansdown, said the FTSE 100 held

its head above water yesterday amidst a sea of red for tech stocks around the world. Defensive sectors had the best of it including non-cyclical consumer stocks such as Unilever and British American Tobacco, as well as the bigger pharmaceutical names. The same sectors were also in the green across the Atlantic, meaning those portfolios with broader exposure are likely to have smoothed out the market’s most recent gyrations.

Companies in the semiconductor industry have borne the brunt of the sell-off as the emergence of a new AI model from Chinese startup DeepSeek, reportedly developed on a shoestring budget of under $6m, raised concerns about the outlook for spending on cloud infrastructure. The authenticity of this figure has been widely contested.

Nonetheless, Wall Street’s darling Nvidia has lost its briefly held crown as the world’s most valuable company, diving 17% and losing $600bn of market value along the way, the biggest ever loss for a stock in a single day. Other big semiconductor names caught in the crossfire include custom chip designer Broadcom and memory specialist Micron. Outside of the US, stocks that have taken a hit range from Taiwan Semiconductor Manufacturing Company through to the Dutch builder of chip printing machines ASML.

But that only tells one side of the story. For those looking to integrate AI into their business models the prospect of lower development costs could seriously boost returns on investment. Salesforce CEO Mac Benioff’s comments on social media that: ‘data is the new gold’ helped propel the shares up by 4%. And within the ‘Magnificent Seven’, Apple, Meta and Amazon were all in the green.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Donald Trump has said that DeepSeek should be a “wake-up call” for American AI firms, after US markets got hammered amid concerns that the Chinese startup could challenge the dominance of US AI leaders.

The new US president said in Florida:

The release of DeepSeek, AI from a Chinese company should be a wakeup call for our industries that we need to be laser-focused on competing to win.

He pointed to DeepSeek’s ability to use fewer computing resources.

I view that as a positive, as an asset... you won’t be spending as much, and you’ll get the same result, hopefully.

OpenAI chief executive Sam Altman praised DeepSeek’s launch, saying that it was “invigorating to have a new competitor”.

The popularity of the just-launched Chinese version of OpenAI’s ChatGPT, a free AI app, which the company says it built with cheaper and less advanced chips, sparked a trillion dollar sell-off in US stock markets. One investor called it a “Sputnik moment” for the world’s AI superpowers. The rout hit everything linked to the AI supply chain, from chip and cable makers to data centres and software firms.

On Wall Street, Nvidia, a leading maker of computer chips that power AI models, slumped by nearly 17% and erased almost $593bn in market cap by itself, the biggest single loss of all times. It accounted for most of the 3% drop on the tech-heavy Nasdaq.

Other tech stocks also plunged including AMD, down 6.4%, Intel, down 2.6%, and the Dutch maker of chip manufacturing equipment ASML, down 7%. An index of US semiconductor stocks slid by 9.2% in its biggest single-day percentage fall since March 2020.

The sell-off carried on in Asia, where Japan’s Nikkei lost a further 1.4%, led by chip-related stocks. (Shares are also pressured as interest rates go up in Japan.) The rest of Asia was quiet as China, Taiwan and South Korea were closed for the Lunar New Year and Hong Kong shut early ahead of the break. The Hang Seng edged up 0.1%.

Japanese chip-testing equipment maker Advantest, one of Nvidia’s suppliers, dropped by 11% while chip-making equipment maker Tokyo Electron lost 5.7% and technology start-up investor SoftBank slid by 5.2%.

The Japanese yen, considered as a safe haven, continued to rise against the dollar, up nearly 1% to its strongest level since mid-December. This hurts shares of exporters, though. US stock futures are steady after the rout, pointing to a slightly higher open on Nasdaq later today and a slightly lower open for the broader S&P 500. The dollar has bounced back by 0.5% against a basket of major currencies.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, believes that yesterday’s AI sell-off was overdone. She argues:

There are reports praising DeepSeek’s performance, some experts say it’s impressive, others say it’s disruptive, and Nvidia itself said that the company came up with something ‘excellent’ – using a lot of its less advanced chips. But beyond the fact that the company used less advanced and cheaper Nvidia chips to build its model, there are a lot of unanswered questions about DeepSeek, including whether its model could be integrated and used by other applications and whether the company really built a model for less than $6m whereas the price mark of the US AI models reaches several hundred million dollars. And last but not least, DeepSeek looks like it made something that already existed for a cheaper price. But it did not come up with an end product that did not exist.

But if DeepSeek successfully does what it says it does - bring equal performance AI models for a cheaper price - it will clearly help the Chinese local players, and all-sized companies around the world that have limited budgets to integrate AI models into their daily lives. The latter will increase the demand for less advanced chips than Nvidia’s best performers, but it will increase demand for chips, still. In this context, we were already pointing at a growing window of opportunity for alternative chip makers – like AMD – in the process of wider adoption of AI models with cheaper chips. We now have a stronger conviction in this view. As such, yesterday’s selloff could move capital around and benefit to the makers of cheaper chips that could appeal to a larger client base than the US Big Tech.

The Agenda

• 10am GMT: UK 10-year index-linked Treasury gilt auction

• 1.30pm GMT: US Durable goods orders for December

• 2pm GMT: US house prices for November

• 3pm GMT: US Conference Board consumer confidence for January

• 5pm GMT: European Central Bank president Lagarde speaks