Japan’s Nikkei drops 1.4% while stock futures point to slightly higher open on Nasdaq; Trump says ‘we need to be laser-focused on competing to win’.

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Donald Trump has said that DeepSeek should be a “wake-up call” for American AI firms, after US markets got hammered amid concerns that the Chinese startup could challenge the dominance of US AI leaders.

The release of DeepSeek, AI from a Chinese company should be a wakeup call for our industries that we need to be laser-focused on competing to win.

I view that as a positive, as an asset... you won’t be spending as much, and you’ll get the same result, hopefully.

There are reports praising DeepSeek’s performance, some experts say it’s impressive, others say it’s disruptive, and Nvidia itself said that the company came up with something ‘excellent’ – using a lot of its less advanced chips. But beyond the fact that the company used less advanced and cheaper Nvidia chips to build its model, there are a lot of unanswered questions about DeepSeek, including whether its model could be integrated and used by other applications and whether the company really built a model for less than $6m whereas the price mark of the US AI models reaches several hundred million dollars. And last but not least, DeepSeek looks like it made something that already existed for a cheaper price. But it did not come up with an end product that did not exist.

But if DeepSeek successfully does what it says it does - bring equal performance AI models for a cheaper price - it will clearly help the Chinese local players, and all-sized companies around the world that have limited budgets to integrate AI models into their daily lives. The latter will increase the demand for less advanced chips than Nvidia’s best performers, but it will increase demand for chips, still. In this context, we were already pointing at a growing window of opportunity for alternative chip makers – like AMD – in the process of wider adoption of AI models with cheaper chips. We now have a stronger conviction in this view. As such, yesterday’s selloff could move capital around and benefit to the makers of cheaper chips that could appeal to a larger client base than the US Big Tech.

10am GMT: UK 10-year index-linked Treasury gilt auction.

1.30pm GMT: US Durable goods orders for December.

2pm GMT: US house prices for November.

3pm GMT: US Conference Board consumer confidence for January.

5pm GMT: European Central Bank president Lagarde speaks.