FTSE 100 slips as Chinese AI firm DeepSeek rattles US tech

Global financial markets started the trading week contending with a number of fresh concerns, including the first instalment of unpredictable foreign policy under Trump 2.0 after the new president took aim at Colombian goods. Markets were also rattled by a US tech sell-off sparked by developments in China.

Traders were monitoring sharp declines in US futures amid concerns that Chinese AI firm DeepSeek could give US counterparts a run for their money, threatening an upset in the AI-induced rally that has propelled US equities higher.

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S&P 500 futures were down over 2% at the time of writing as traders reacted to the strength of DeepSeek’s AI models which appear to have higher levels of efficiency, both in terms of costs and achieving desired results with less complex chips.

“The small Chinese research and engineering firm DeepSeek’s AI Chatbot has proved so popular it jumped into the top spot on US iOS App, usurping Open AI’s ChatGPT,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“DeepSeek threatens to spook big tech and has already sent shivers through Silicon Valley by releasing details about how to build large language models more cheaply using low-cost Chinese chips.”

The culmination of Trump tariff actions, worries about the health of the AI rally, and a rising pound curtailed demand for the UK’s risk assets on Monday.

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“Investors are navigating global trade while a slightly stronger pound compared to recent weeks is holding back multinationals due to the effect on their overseas earnings,” Susannah Streeter explained.

Trump’s erratic approach to Colombia and the use of tariffs were felt in UK stocks on Monday as sentiment took a hit.

That said, the UK’s lack of exposure to technology was a blessing, and the declines in the FTSE 100 were far less severe than in US stocks.

London’s leading index slipped 0.25%, led lower by miners and the tech-heavy Scottish Mortgage Investment Trust.

Miners were down heavily after reports BHP would put its plans to acquire Anglo American on hold. Anglo shares sank 5%.

Defensive stock highlighted the risk-off tone to trade with Severn Trent and British American Tobacco gaining 4% and 2%, respectively.

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