Please see below article received from Brooks Macdonald this morning, which provides a global market update.
What has happened
There was a lot going on yesterday. In central bank news, while the Bank of Canada cut interest rates, the US Federal Reserve stayed on hold as expected – that is probably in contrast to the European Central Bank who are expected to cut when they announce at 1.15pm UK-time later today. After the US close yesterday, we had mixed reactions from three ‘Magnificent Seven’ US tech companies, with Meta and Tesla both up in after-marketing trading, but Microsoft down; instead, it was US tech company IBM that stole the limelight with its shares up almost +9% after the close on better numbers and blowout guidance. Elsewhere, a reminder that Asian markets are quieter this week given China is shut for new year celebrations.
DeepSeek or ‘DeepFake’?
Microsoft and OpenAI this week confirmed they are investigating whether the Chinese AI start-up DeepSeek illegally used OpenAI’s proprietary models in order to train its DeepSeek competitor model. The news has also drawn a political response from US President Trump’s Whitehouse AI ‘tsar’ David Sacks: “there’s substantial evidence that what DeepSeek did here is they distilled knowledge out of OpenAI models, and I don’t think OpenAI is very happy about this” – Sacks added that “it is possible” that DeepSeek is guilty of Intellectual Property (IP) theft, and labelled DeepSeek a “copycat” model.
Bullish US tech talk shores up sentiment
US tech leaders were in upbeat mood yesterday following their latest results: Meta’s Mark Zuckerberg predicted that 2025 would be a “really big year” for Meta’s plans in AI; Tesla’s Elon Musk said he saw “epic” growth for the company ahead; Microsoft’s CFO Amy Hood said commercial cloud service bookings were looking “far ahead” of what the company had been expecting; while IBM CEO Arvind Krishna talked of “a faster-growing, more-profitable IBM”. Next up for the ‘Magnificent Seven’ megacap tech group is Apple which has results out after the US close this evening. After that, Alphabet and Amazon follow next week, with Nvidia book-ending things in late February.
What does Brooks Macdonald think
If China’s DeepSeek stole OpenAI’s IP, that will clearly ratchet up broader US-China geopolitical tensions. Yesterday US White House spokesperson Karoline Leavitt said that US officials were looking at the national security implications, adding that Trump is considering additional trade tariffs on Chinese goods imports and new curbs on Nvidia chip exports into China. All in all, it suggests that the eventual hit to China’s economy from the fallout of this week’s DeepSeek episode might be rather a lot bigger than the Chinese tech start-up’s claimed sub-US$6 million chatbot development cost.


Bloomberg as at 30/01/2025. TR denotes Net Total Return.
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Chloe
30/01/2025