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.
Tue 28 Jan 25, 8:33am (AEDT)
Tue 28 Jan 25, 8:33am (AEDT)
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)
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 )
Mexico central bank mulls larger rate cuts in early 2025 (BBG)
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)
Tue 28 Jan 25, 8:34am (AEDT)
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%).
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
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)
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