Market watch: 29th January 2025
The year of the snake is upon us; time to shed bad trading habits. Yesterday, US stock markets made a decent show of recovering from the fallout of the massive sell-off in Nvidia (NVDA) shares that occurred on Monday. For those who missed it, Chinese start-up DeepSeek surprised the world by releasing an open source version of its AI model that supposedly competes with the best of what Silicon Valley has to offer. More importantly, the company trained the model for a fraction of the price of its competitors. The news prompted a half-trillion Dollar loss in Nvidia’s market cap, the assumption being that the hardware requirements for AI endeavours are not as high as previously thought. GPUs not needed. Nvidia plunged 17% by Monday’s close, dragging the Nasdaq Composite and S&P 500 down along with it. By the end of Tuesday’s session however, both indices had managed to undo much of the damage. Nvidia shares closed at $129 yesterday, down from highs of $153 three weeks ago.
As for the rest of the financial markets, things are somewhat tame in comparison. The Dollar gained some strength yesterday, the DXY rising half a percent to just under 108. Currency traders are bracing for back-to-back announcements from the Bank of Canada and the Federal Reserve. The former is expected to shave a quarter percent off the current 3.25% whereas the latter is expected to remain steadfast at 4.5%. Of course, it is not all about numbers. Today marks the Fed’s first interest rate decision under the Trump administration and markets will be keen to gauge the general sentiment among board members.