Days after Chinese AI shock: How did the U.S. market respond?

On Monday, January 27th, the Chinese AI DeepSeek model caused significant plummets in the hi-tech sector. The most essential United States assets went into chaos just a couple of days after Donald Trump’s inauguration.

Major indices after Chinese AI announcement

In case you missed it – the DeepSeek model turns out to cost less than American solutions. Donald Trump immediately limited the export of AI-based devices to China. These two events led to major falls in the most critical assets.

The biggest and most significant indexes in the U.S. economy – NASDAQ (US100) and S&P 500 (US500) – got hit heavily by the Chinese AI earthquake. NASDAQ fell below the 20,800 level at some point, which hasn’t been seen for the last two weeks. The S&P 500 also plummeted by a couple of percentage points below 6,000.

However, both indices have been slowly recovering since Monday. This trend isn’t new – steady recovery after massive falls often happens when it comes to both US100 and US500.

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AI American companies – what’s going on?

Due to multiple assets impacting its price, indices usually present stable growths or decreases in value compared to equities. AI powerhouses have been presenting massive volatility for the last couple of days.

NVIDIA turned out to be the biggest loser of this week in the AI market. After almost 20 percentage points fell at the beginning of the week, the NVDA stock price rose to almost 130, and after that, it fell below 125.

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This example shows how one geopolitical decision can substantially change the market. Keep in mind that the AI market is becoming more and more volatile.

How did Chinese AI shock impact crypto?

Speaking of volatile markets… AI often comes together with cutting-edge technologies. Cutting-edge technologies always remind traders of cryptocurrencies. How did they cope with these rapid changes?

Panic sales of the AI assets started the avalanche, which also hit the crypto industry. BTCUSD has fallen below 100,000 for the first time since January 15th. The same goes with ETHUSD, although Ethereum has been on a slightly negative trend after the rise of Solana right after TRUMP token’s launch.

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Unlike AI equities, both major cryptos – together with multiple smaller altcoins – recover well. On Thursday 30th, Bitcoin surpassed the 105,000 level, while Ethereum reached over 3,200 for the first time this week.

Patient rises in the Far East

The loss of Americans can benefit other regions, especially those that are tightly connected to the Chinese AI market. Tencent Holdings (HKG: 0700), a significant player in the technological landscape of the Far Eastern economy, has crossed the 400 level for the first time since January 6th. Similarly, Xiaomi (HKG: 1810) has recorded another significant growth, continuing its stable yet noticeable rise since the summer of 2024.

The first days of Donald Trump’s presidency turned out to be as turbulent as expected. Keep tabs on current information that may impact your trading portfolio.