Nasdaq dives on Chinese AI threat – Earnings in focus [Video]

Ipek Ozkardeskaya ipekScope

Last week wrapped up with a striking contrast: bullish momentum through most of the week gave way to a bearish close on Friday. A set of stronger-than-expected PMI data prompted investors to recalibrate their Federal Reserve (Fed) outlook, weighing stronger economic growth and the likelihood of a more hawkish Fed response.

A such, the Stoxx 600 retreated after hitting a fresh record. The S&P500 and Nasdaq traded lower as well, and futures, especially Nasdaq futures, are looking pretty bad this morning with a more than 2% slide at the time of writing hammered by the news that the Chinese startup DeepSeek could run its latest AI model on less advanced chips... and could disrupt the US tech’s global dominance.

But keep calm and breath. It’s probably too early to bet that DeepSeek will challenge the global AI leaders. This week’s Big Tech earnings will certainly give a stronger conviction to those looking for a fresh direction.

This week, four of the Magnificent 7 stocks – Microsoft, Meta, Tesla and Apple – and ASML are due to announce their Q4 earnings, along with Intel, Visa and Mastercard, and the oil giants.

It will be a big week for central bank decisions, too. The Fed is expected to keep rates unchanged, while the European Central Bank (ECB) and the Bank of Canada (BoC) are expected to cut theirs by 25bp.

Author

Ipek Ozkardeskaya

ipekScope

Ipek Ozkardeskaya began her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients.

GBP/USD surrenders some gains, back to 1.3420

GBP/USD holds on to moderate gains above 1.3400 the figure on Friday. Optimism surrounding the UK government’s leadership transition and expectations of further BoE tightening support the British Pound, while easing tensions in the Middle East and fading Fed rate-hike expectations weigh on the US Dollar.

EUR/USD turns positive, targets 1.1450

EUR/USD now picks up pace and advances toward the 1.1440 region on Friday, up modestly for the day. With no major economic data due, lingering uncertainty over the US-Iran conflict keeps investors cautious, limiting the pair's upside.

Gold remains offered, still below $4,100

Gold struggles to extend Thursday’s rebound and navigates below the $4,100 mark per troy ounce on Friday. Uncertainty surrounding the Middle East conflict limits the precious metal’s upside, which is also under pressure amid rising US Treasury yields across the curve.

Week ahead – US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.