**********On Tuesday (January 28th Beijing time), spot gold trading was around 2740.91, with gold prices falling more than 1% on Monday, falling from a near historical high touched on the previous trading day. The reason was the wider market downturn triggered by DeepSeek's shock, which prompted investors to sell their gold positions and cash out. US crude oil trading was around $73.18 per barrel, and oil prices fell about 2% on Monday, hitting a two-week low. Interest in DeepSeek's low-cost artificial intelligence (AI) model increased significantly, causing concerns about energy demand in data centers.
Key Focus for the Day: Initial Monthly Rate of Durable Goods Orders in December in the United States, Consumer Confidence Index of the US Chamber of Commerce in January, and Speech by European Central Bank Managing Director Villeroy.
Holiday Reminder
stock market
The three major US stock indices closed with mixed gains and losses, with the Dow Jones up 0.65%, the S&P 500 down 1.46%, and the Nasdaq down 3.07%.
Nvidia's stock price plummeted by nearly 17%, with a record loss of $589 billion in market value. According to Forbes website, the net worth of the company's CEO and largest individual shareholder, Huang Renxun, shrank by $20.8 billion at the close, from $124.4 billion to $103.7 billion, and from 10th place on Forbes' real-time billionaire list to 17th place. Oracle (ORCL. N) fell 14%, with Chairman Larry Ellison's net worth shrinking by $27.6 billion, dropping from third to fifth on the global billionaire list. According to the Bloomberg Billionaires Index, the world's top 500 billionaires lost a total of $108 billion on Monday, with tech industry giants losing $94 billion in overall wealth, accounting for approximately 85% of the index's total decline.
Anne Wealth Management Chief Economist Brian Jacobsen said that if DeepSeek really lives up to the saying 'better mousetrap', it could overturn the entire artificial intelligence theme that has driven market development over the past two years. This could mean a decrease in demand for chips, a decrease in demand for large-scale power production to support models, and a decrease in demand for large data centers. However, this may also mean that AI becomes more widespread and helps drive the development of a range of useful applications.
White House AI director David Sacks posted on X that DeepSeek R1's performance shows that competition in artificial intelligence will be very fierce, and also proves that US President Trump's repeal of Biden's executive order was the right move. Sacks said Biden has restrained American artificial intelligence companies with executive orders. He also said, 'I have full confidence in the United States, but we cannot be complacent.'.
King City
Gold prices fell more than 1% on Monday, falling from near historical highs reached in the previous trading day, due to a broader market downturn triggered by the shock of DeepSeek, which prompted investors to sell their gold positions to cash out.
Spot gold was reported at $2736.75 per ounce, down 1.3%, and had briefly risen to near historical highs last Friday. US gold futures closed 1.5% lower at $2738.40 per ounce.
The sharp decline in global stock markets has driven the safe haven trend of other asset classes, with US Treasury yields falling to a three week low and the US dollar index hitting its lowest level since December 18th.
Bart Melek, head of commodity strategy at TD Securities, said, "This (sell-off) is largely driven by the broad stock market, rather than simply being influenced by conventional interest rate or exchange rate factors. We have observed a certain degree of liquidity issues. Some investors may be forced to cash out in the market, perhaps due to the violent fluctuations in stocks they previously held through leverage or margin. Therefore, I believe this is a chain reaction caused by liquidity issues, with gold and other risky assets being sold off
According to the FedWatch tool from Zhishang Institute, the market generally expects the Federal Reserve to keep interest rates unchanged at its first policy meeting this year.
Spot silver fell 1.7% to $30.10 per ounce, up 0.9% last week. Palladium fell 2.9% to $959 per ounce; Platinum fell 0.3% to $945.80 per ounce.
Oil market
Oil prices fell about 2% on Monday, hitting a two-week low, as interest in DeepSeek's low-cost artificial intelligence (AI) model surged, raising concerns about energy demand for data centers.
Before the news of DeepSeek came out, oil prices were already falling and people were concerned that the tariffs proposed by US President Trump could further put pressure on economic growth and energy demand.
Brent crude oil futures closed down $1.42, a decrease of 1.8%, with a settlement price of $77.08 per barrel; US crude oil futures closed down $1.49, or 2.0%, with a settlement price of $73.17. Brent crude oil closed at its lowest level since January 9th, while US crude oil closed at its lowest level since January 2nd.
Chinese startup DeepSeek's AI assistant has surpassed its American competitor ChatGPT to become the highest rated free app on the Apple App Store in the United States. This has raised doubts among investors who are investing in American energy companies and hoping that AI can drive energy demand in data centers.
According to a report by a Furui analyst, the DeepSeek model is said to be more energy-efficient and cost-effective, which raises questions about the huge electricity demand forecast in the United States. They pointed out that in most forecasts, AI accounts for around 75% of the overall demand forecast for the United States in 2030-2035.
Analysts say that after Trump called on the Organization of the Petroleum Exporting Countries (OPEC) to lower oil prices last week, oil prices have been sluggish in recent days.
The OPEC+alliance, consisting of OPEC and its allies including Russia, has not yet responded to Trump's call. OPEC+representatives have pointed out that the current plan is to increase oil production starting from April.
Trump's tariff threat has also put significant pressure on oil prices, exacerbating concerns that trade tensions could harm global economic growth and oil demand.
currencies
The Japanese yen and Swiss franc rose on Monday, while the US dollar fell against major currencies as the market weighed the impact of a Chinese startup launching a free and open-source artificial intelligence model, dragging down tech stocks.
DeepSeek has launched a free artificial intelligence assistant that reportedly uses lower cost chips and less data, seemingly challenging the common bet on artificial intelligence that has boosted US tech stocks in the past, especially the stock price of chip manufacturer Nvidia.
The US dollar is under pressure, while the benchmark 10-year Treasury yield fell 6 basis points to a one month low of 4.561%, as investors rushed to buy safe haven assets and government bonds.
Dragged by technology stocks, the benchmark S&P 500 index fell 1.46% to close at 6012.28 points. Nvidia fell 17% to $118.42, hitting a new low in nearly four months.
Eugene Epstein, the head of North American structures at Moneycorp in New Jersey, said, "Many people seem to have made quite bold inferences - that DeepSeek's impact on tech giants will trigger a stock market crash, which will force the Federal Reserve to support the market. I think these inferences are too bold, but given that all asset classes are moving towards traditional safe haven, this seems to be the current logic of the market. As for whether this logic is reasonable, I think there is a lot of controversy. But at least the current market reaction is indeed like this
The Japanese yen rose 0.87% against the US dollar to 154.63 yen, reaching its strongest level since mid December at 153.71 yen during trading. The Swiss franc rose 0.50% against the US dollar to $0.90155.
The US dollar index, which measures the exchange rate of the US dollar against a basket of currencies, fell 0.29% to 107.36, having previously reached its lowest level since mid December. The euro rose 0.02% to $1.0491.
The US dollar recorded its largest weekly decline in over a year last week due to market expectations that the tariffs ultimately implemented by US President Trump will be lower than previously anticipated. But as the United States and Colombia withdraw from the brink of trade tensions, concerns resurface.
Marc Chandler, the market strategy of Bannockburn Global Forex in New York, said, "Many people are already concerned about the overvaluation of the US stock market, and the DeepSeek incident has exposed this concern. The chain reaction it triggered is a decline in the yield of 10-year US Treasury bonds, which is why safe haven currencies such as the Japanese yen and Swiss franc have performed relatively strongly
As a barometer of tariff concerns, the Mexican peso fell 2% against the US dollar to 20.693 pesos. The Canadian dollar fell 0.22% against the US dollar to 1.44 Canadian dollars. Trump stated last week that he may impose tariffs on products from Canada and Mexico starting from February 1st.
Chandler said, "The Mexican peso is the weakest performing emerging market currency today. I think it has been affected by the Colombian incident and the threat of tariffs
The Australian dollar fell 0.41% against the US dollar to $0.6283. The New Zealand dollar fell 0.35% against the US dollar to 0.5689 US dollars. Major central banks, including the Federal Reserve and the European Central Bank, will hold meetings this week. Last week, the Bank of Japan raised interest rates, and President Kazuo Ueda stated that as wage and price increases expand, the Bank of Japan will continue to tighten policies.
The personal consumption expenditure (PCE) price index, the most favored inflation indicator of the Federal Reserve, will be released on Friday, and Germany, France, and Japan will also release inflation data on Friday.
Chandler added, "I believe the market will turn cautious before the Federal Reserve and the Bank of Canada announce their interest rate decisions on Wednesday
international news
The scale of overnight reverse repo usage by the Federal Reserve has once again fallen below $100 billion, reaching its lowest level since 2021
The balance of the Federal Reserve's overnight reverse repurchase (RRP) agreement tool has once again fallen below $100 billion, reaching the lowest level in nearly four years, as the high level of non-public market continues to divert central bank funds. On Monday, about 26 counterparties deposited $92.9 billion in RRP funds, the lowest since April 2021; The previous trading day was 104.9 billion US dollars.
NVIDIA plummets nearly 17%, tech giant led by Huang Renxun's wealth shrinks significantly
Nvidia's stock price plummeted by nearly 17%, with a record loss of $589 billion in market value. According to Forbes website, the net worth of the company's CEO and largest individual shareholder, Huang Renxun, shrank by $20.8 billion at the close, from $124.4 billion to $103.7 billion, and from 10th place on Forbes' real-time billionaire list to 17th place. Oracle (ORCL. N) fell 14%, with Chairman Larry Ellison's net worth shrinking by $27.6 billion, dropping from third to fifth on the global billionaire list. According to the Bloomberg Billionaires Index, the world's top 500 billionaires lost a total of $108 billion on Monday, with tech industry giants losing $94 billion in overall wealth, accounting for approximately 85% of the index's total decline.
The White House demands the development of a plan to allow federal employees to return to the office, but actual implementation faces resistance
Another guidance issued by the United States Personnel Management Office on Monday also launched Trump's plan to rebuild the federal workforce, which will give the president the power to hire and dismiss some previously protected employees. The mandatory requirement for returning to the office applies to federal employees, "unless due to disability, eligible medical conditions, or other convincing reasons proven by the head of the institution. Military spouses engaged in civilian work are also not subject to this restriction. The memorandum executing Trump's order acknowledges that there are many practical obstacles to allowing employees to return to the office. Many of them are bound by collective bargaining agreements, including the agreement reached by Social Security Administration employees in the last few days of the Biden administration to allow for more flexible work arrangements.
The EU plans to postpone Russia's fuel phase out plan by one month
The European Commission may postpone the release of the roadmap for phasing out Russia's remaining fuel supply, including liquefied natural gas. Insiders have revealed that the EU may present the roadmap on March 26th, one month later than originally planned. After the closure of the natural gas pipeline flowing through Ukraine at the end of last year, liquefied natural gas from Moscow remains one of Europe's last major energy dependencies. Last year, the European Union imported a record amount of liquefied natural gas from Russia, with France, Spain, and Belgium being the largest importers. Some EU countries still import nuclear fuel from Russia.
EU says it will not negotiate on Greenland issue
On January 27th local time, EU High Representative for Foreign Affairs and Security Policy, Kallas, stated that the EU will not negotiate on the Greenland issue and supports EU member state Denmark. Greenland is an autonomous territory of Denmark. US President Trump previously stated that he would not rule out the possibility of using military force to seize control of Greenland. Trump said Denmark should give up control over Greenland or face high tariffs.
Oil traders expect OPEC+meeting next week to maintain supply plan to withstand pressure from Trump
Oil traders expect OPEC+to stick to its current supply policy at next week's evaluation meeting, resisting pressure from US President Trump. Trump previously requested OPEC to increase supply and lower oil prices. All but one of the 15 traders and analysts surveyed expect that the alliance led by Saudi Arabia and Russia is unlikely to deviate from its current roadmap, which calls for continued supply restrictions this quarter and gradual relaxation of restrictions starting from April. Several OPEC+representatives privately expressed the same view. Trump called twice last week for OPEC to lower oil prices.
Domestic news
In 2024, China's service trade scale will reach a new high, and travel services will grow the fastest
In 2024, China's service trade will achieve rapid growth and reach a new historical high in scale. In 2024, the total import and export volume of services for the year was 7523.8 billion yuan, a year-on-year increase of 14.4%. Among them, exports amounted to 3175.56 billion yuan, an increase of 18.2%; Imports amounted to 4348.24 billion yuan, an increase of 11.8%; The trade deficit in services was 1172.68 billion yuan. Travel services have grown the fastest, and since 2024, travel services have continued to maintain high-speed growth. The annual import and export reached 205.15 billion yuan, an increase of 38.1%, making it the largest sector of service trade. Knowledge intensive service trade maintained growth, with imports and exports totaling 2.89652 trillion yuan for the whole year, an increase of 6.5%.
The explosive growth of domestic video generation models may lead to a shortage of 4 million AI talents in China by 2030
Since 2024, domestic video generation models have shown explosive growth. New job demands are emerging, such as AI content creators, AI director assistants, AI script generators, etc. According to data, as of December 2024, the user base of generative artificial intelligence products in China reached 249 million, accounting for 17.7% of the total population. In 2024, the Ministry of Human Resources and Social Security announced 19 new professions, including applications for generative artificial intelligence systems. Industry reports indicate that by 2030, China's AI talent gap will reach 4 million. (CCTV)
The DeepSeek team has officially released two multimodal frameworks: Janus Pro and JanusFlow
According to Safphere, the DeepSeek team has officially released two multimodal frameworks - Janus Pro and JanusFlow. Among them, Janus Pro is an innovative framework for unified multimodal understanding and generation, which greatly improves the adaptability and performance of the model in different tasks by decoupling visual encoding. JanusFlow is a unified framework that combines Rectified Flow with autoregressive language models. It not only performs excellently in understanding tasks, but also generates high-quality images, showcasing the simplicity and power of framework design.
