Nasdaq 100 Plunges as ChatGPT Rival Deepseek Upends AI Arms Race

Also 10-year T-note, gold, crude oil, and Euro futures

1. Nasdaq 100 E-mini futures (/NQ): -2.75% 
2. 10-year T-note futures (/ZN): +0.5% 
3. Gold futures (/GC): -0.9% 
4. Crude oil futures (/CL): -0.31% 
5. Euro futures (/6E): +0.13% 

The primary catalyst for today's market reaction is the unveiling of DeepSeek AI, a powerful new AI model from China, which is seen as a significant competitor to OpenAI's dominance. Today's financial market turmoil is largely driven by significant drops in tech stocks, particularly those related to artificial intelligence (AI). Nvidia (NVDA), a major player in AI, saw its shares tumble over 11% in pre-market trading. The rise of DeepSeek AI is creating significant competitive pressure on OpenAI. DeepSeek's new AI model, which rivals privately held OpenAI's ChatGPT, has quickly gained popularity, even topping Apple's App Store charts1. This is causing investors to reassess the AI market, potentially affecting OpenAI's market position and valuation. (Note: today's intro was written with the help of ChatGPT, for kicks.) 

An open-source artificial intelligence model released by China last month and has gained popularity over the weekend. The new model, which is open source, is injecting uncertainty into the market this morning. DeepSeek can apparently run its models on less sophisticated hardware, calling into question whether demand for AI chips will hold up. Nvidia (NVDA) fell 11% in pre-market trading. Nasdaq futures (/NQH5) plunged 3.5% in morning trading.  

Bond prices are up across the curve, with the 10-year T-note futures (/ZNH5) rising 0.63% this morning to the highest level since mid-December. The move is likely driven by some safe-haven flows, as equity investors shift risk-off amid the selloff in stocks. This week brings a Federal Reserve interest rate decision, which could change the trajectory for rate cut bets and with it, bond prices.  

Gold prices (/GCG5) pulled back on Friday following a positive performance last week when the metal hit its highest levels traded since early November. The move comes despite lower yields and a softer dollar, two things that normally support precious metals prices. The Fed is expected to keep rates steady later this week, marking the first hold since September. The shift in rate cut bets following the meeting will likely be key for gold prices through the rest of this month.  

Crude oil prices (/CLH5) fell to start the week after President Trump’s tariff threat toward Columbia was reversed. Columbia exports about 200,000 barrels per day to the United States. Traders were concerned the new trade dispute could impact American supply should the recent tensions evolve into a full-blown trade war. Meanwhile, President Trump continues to call on OPEC to raise production in a bid to lower gas prices in the United States.  

The European Central Bank (ECB) is expected to cut interest rates again later this week. The moves by U.S. and European rate setters have been expected for some time, meaning those moves are likely priced in. European stocks were week overnight after ASML Holding (ASML) reported disappointing earnings, which echoed through European trading markets.  

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Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx

Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
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