Global Markets Tumble as China's DeepSeek Disrupts AI Sector

U.S. technology shares fell sharply as investors shifted to safer assets following the rising popularity of Chinese AI startup DeepSeek. The situation fueled a global market downturn, with U.S. bonds and safe-haven currencies gaining. Nvidia and other tech firms faced significant drops amid rising volatility.

U.S. technology shares witnessed a significant decline on Monday, as the emergence of Chinese startup DeepSeek's low-cost AI model cast doubts on high valuations in the sector. The instability in global equities led to a flight to safety, boosting U.S. government bonds and safe-haven currencies like the yen and Swiss franc.

Major indices faced declines, with the Dow Jones Industrial Average falling 0.15% to 44,358, the S&P 500 dropping 1.8% to 5,991, and the Nasdaq Composite slumping by 3% to 19,360. Nvidia's shares dropped by about 15%, marking a steep fall in line with industry peers Broadcom and Marvell Technology. The CBOE Volatility Index surged 25%, reaching its highest level since December 20.

DeepSeek's rise to the top of Apple's App Store with its innovative AI technology prompts concerns over U.S. dominance in AI, impacting trade, chips, and energy. European markets reflected the mood, with the STOXX 600 technology index dropping 3%. The U.S. dollar fell against major currencies like the yen, reflecting increased demand for safe assets.

(With inputs from agencies.)