Market Wraps

Morning Wrap: ASX 200 to rise, DeepSeek sparks Nvidia selloff, Nasdaq logs worst session of 2025

Tue 28 Jan 25, 8:45am (AEDT)

ASX 200 futures are up 14pts (+0.16%) as of 8:30 am AEDT.

In a nutshell:

  • Chinese AI company DeepSeek rattled tech stocks after launching an AI assistant costs just ~US$5m to train (vs. ChatGPT ~US$100m)

  • This sparked a sharp selloff across US-tech stocks like Nvidia (-16.9%), Alphabet (-4.0%) and Microsoft (-2.1%)

  • Despite US indices selling off, breadth was positive as investors flocked to defensive and value pockets of the market

Let's dive in.

Overnight Summary

Tue 28 Jan 25, 8:33am (AEDT)

Name Value % Chg
Major Indices
S&P 500 6,012 -1.46%
Dow Jones 44,714 +0.65%
NASDAQ Comp 19,342 -3.07%
Russell 2000 2,284 -1.02%
Country Indices
Canada 25,289 -0.70%
China 3,251 -0.06%
Germany 21,282 -0.53%
Hong Kong 20,198 +0.66%
India 75,366 -1.08%
Japan 39,566 -0.92%
United Kingdom 8,504 +0.02%
Name Value % Chg
Commodities (USD)
Gold 2,742.8999 -1.30%
Iron Ore 101.34 -
Copper 4.239 -1.90%
WTI Oil 73.05 -2.16%
Currency
AUD/USD 0.6285 -0.48%
Cryptocurrency
Bitcoin (USD) 101,621 -3.03%
Ethereum (AUD) 5,001 -5.34%
Miscellaneous
US 10 Yr T-bond 4.528 -2.12%
VIX 18.09 +21.85%

US Sectors

Tue 28 Jan 25, 8:33am (AEDT)

SECTOR % CHG
Consumer Staples +2.85%
Health Care +2.19%
Financials +1.14%
Real Estate +1.00%
Consumer Discretionary +0.30%
Materials +0.07%
SECTOR % CHG
Energy -0.74%
Communication Services -0.81%
Industrials -1.32%
Utilities -2.33%
Information Technology -5.58%

S&P 500 SESSION CHART

SPX
S&P 500 gapped down but finished off worst levels (Source: TradingView)

OVERNIGHT MARKETS

  • Major US benchmarks tumbled, but finished off worst levels

  • S&P 500 down 1.46% vs. session low of -2.27%, still marks worst session since 18-Dec Fed’driven selloff

  • Breadth was still positive, with the Equal-weight S&P 500 outperforming the official benchmark by 153 bps 

  • Today’s big story – Chinese AI company DeepSeek has launched its open-source V3 LLM, which has a training cost of around US$5.5m vs. OpenAI’s GPT-4o which costs of over US$100m

  • DeepSeek sent tech stocks tumbling amid concerns about the investment efficiency of big tech companies, which have poured billions into AI-related investments, and the demand for GPUs as cost-effective alternative emerges 

  • Q4 S&P 500 earnings growth currently sits at 12.7%, above the 11.9% expected at the start of earnings season

  • Of the 16% of S&P 500 companies that have reported, 80% have beaten consensus EPS expectations, above the 77% one-year average

  • Trump holds off on Colombia tariffs, but momentum for Canada, Mexico tariffs is growing (FT)

  • Traders anticipate OPEC+ will stick with current production levels, resist Trump calls for cheaper oil prices (BBG)

  • US yields slump to three-week lows on AI risk fuelling flight to safety (BBG)

  • Record volume of PE stakes offloaded in 2024 (FT)

STOCKS

  • China startup DeepSeek puts tech valuations in question, sets off AI market rout (BBG)

  • Silicon Valley impressed with China made DeepSeek despite it working with less-advanced chips (WSJ)

  • DeepSeek overtakes ChatGPT on Apple's App Store (RT)

  • Street betting Tesla's 2025 sales will miss Elon Musk's target (FT )

CENTRAL BANKS

  • Mexico central bank mulls larger rate cuts in early 2025 (BBG)

ARTIFICIAL INTELLIGENCE

  • Analysts mixed on DeepSeek implications, some say real threat to Big Tech others say overreaction (BBG)

  • Power and nuclear stocks fall as DeepSeek efficiency casts doubt on energy demand needs (CNBC)

  • Nvidia loses over half a trillion dollars in market cap in largest daily drop on record (CNBC)

  • Nomura says leveraged ETFs will sell ~US$22bn Monday to rebalance holdings (BBG)

  • Selloff comes after traders purchased 2x Nasdaq ETF at fastest pace on record last week (BBG)

ECONOMY

  • China manufacturing PMI unexpectedly slips into contraction in January, down to 49.1 or the lowest since August (BBG)

  • China industrial profits fall for the third straight year despite December uptick (BBG)

Industry ETFs

Tue 28 Jan 25, 8:34am (AEDT)

Name Value % Chg
Commodities
Strategic Metals 41.47 -0.60%
Steel 61.02 -0.65%
Lithium & Battery Tech 40.985 -1.22%
Gold Miners 37.38 -1.50%
Silver 27.45 -1.65%
Copper Miners 39.09 -2.13%
Uranium 27.09 -11.27%
Industrials
Global Jets 26.48 +0.88%
Agriculture 27.295 -0.24%
Aerospace & Defense 155.03 -1.08%
Construction 77.085 -5.89%
Healthcare
Biotechnology 138.37 +0.78%
Name Value % Chg
Cryptocurrency
Bitcoin 24.6 -3.30%
Renewables
Solar 33.33 -0.95%
CleanTech 6.64 -4.60%
Hydrogen 20.83 -9.04%
Technology
Cloud Computing 25.32 +0.76%
Sports Betting/Gaming 19.8 +0.03%
E-commerce 29.589 -0.07%
Cybersecurity 33.26 -0.18%
Video Games/eSports 84.1723 -1.39%
FinTech 32.38 -1.70%
Electric Vehicles 23.31 -2.79%
Robotics & AI 33.01 -4.29%
Semiconductor 212.55 -7.84%

ASX TODAY

  • Newmont announces sale of Porcupine Operation for up to $425m (NEM)

  • Southern Cross Media Group could be back on the radar of some opportunistic funds, Black Crane as a potential buyer (The Aus)

WHAT TO WATCH TODAY

  • Tech: Expect heavy downward pressure on AI-related plays like NextDC, Megaport etc. That said, a few US-listed data centre names finished off worst levels (e.g. Equinix down 4.3% vs. session low of -8.8%, Digital Reality down 8.7% vs. session low of -13.4%). We'll just have to see how the dust settles

  • Uranium: Uranium ETF (URA) down 11.2% overnight amid concerns that more efficient AI could erode energy demand. Canada's Cameco finished the session down 15.1%, closing at session lows

  • Defensive outperformance: ASX 200 futures pointing towards a positive open, reflecting a decent overnight lead in (ex-Tech). The best performing sectors overnight were Staples (+2.85%), Healthcare (+2.19%) and Financials (+1.14%).

BROKER MOVES

  • Ansell upgraded to Outperform from Hold; target up to $38 from $33.75 (CLSA)

  • Aristocrat Leisure upgraded to Buy from Neutral; target up to $78 from $70 (GS)

  • ASX downgraded to Underweight from Equal-weight; target cut to $55.05 from $58 

  • DigiCo Infrastructure REIT initiated Buy with $5.60 target (UBS)

  • Monadelphous upgraded to Outperform from Neutral; target up to $15.93 from $14.80 (MQG)

  • Flight Centre upgraded to Overweight from Neutral; target up to $20 from $18.80 (JPM)

Macquarie issued a major REIT update, including:

Upgrades

  • Abacus Group upgraded to Outperform from Neutral; target increased to $1.26 from $1.15

  • Centuria Industrial REIT upgraded to Outperform from Neutral; target increased to $3.32 from $3.20

  • Charter Hall Retail REIT upgraded to Outperform from Neutral; target increased to $3.45 from $3.42

  • Dexus Property Group upgraded to Outperform from Neutral; target increased to $7.74 from $6.52

  • Growthpoint Properties Australia upgraded to Outperform from Neutral; target increased to $2.61 from $2.35

  • Lendlease Group upgraded to Outperform from Neutral; target decreased to $6.98 from $7

Downgrades

  • Arena REIT downgraded to Neutral from Outperform; target cut to $3.99 from $4.15

  • Charter Hall Group downgraded to Neutral from Outperform; target increased to $15.71 from $15.43

  • Centuria Capital downgraded to Neutral from Outperform; target cut to $1.85 from $1.87

  • Region Group downgraded to Underperform from Outperform; target cut to $2.03 from $2.38

  • Scentre Group downgraded to Underperform from Outperform; target cut to $3.37 from $3.60

Key Events

Stocks trading ex-dividend: 

  • Mon 27 Jan: None

  • Tue 28 Jan: None

  • Wed 29 Jan: None

  • Thu 30 Jan: Djerriwarrh Investments (DJW) – $0.072, 360 Capital Mortgage REIT (TCF) – $0.052, Perpetual Credit Income Trust (PCI) – $0.007, KKR Credit Income Fund (KKC) – $0.017, Gryphon Capital Income Trust (GCI) – $0.014

Other ASX corporate actions today: 

  • Dividends paid: None

  • Listing: None

  • Earnings: None

  • AGMs: None

Economic calendar (AEDT):

  • 10:30 am: NAB Business Confidence (DEC)

  • 11:30 pm: US Durable Goods Orders (DEC)

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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