Tech Bubble Fears and Tariff Drama Spark Monday Volatility

Monday has kicked off with sharp volatility across global markets, marked by dramatic moves in indices, currencies, and commodities. This follows Friday’s sell-off from long-term all-time highs, with a surprising reversal taking place early Monday morning. The catalyst for this volatility? A combination of tech sector concerns, fresh tariff developments, and disappointing economic data from China.

One of the primary drivers of today’s market sentiment is the emergence of DeepSeek, a newly unveiled competitor to ChatGPT. Reports suggest that DeepSeek is not only more advanced but also significantly cheaper to produce, sparking fears of overvaluation in the U.S. tech sector. These developments have led to a wave of profit-taking and raised concerns about a potential tech bubble, adding to the sharp declines seen in indices at the end of last week.

Adding to the market’s anxiety, the U.S. raised the prospect of imposing tariffs on Colombia. However, the situation de-escalated quickly, as Colombia agreed to the U.S. demands, leading to the suspension of the proposed tariffs. This resolution helped ease some geopolitical concerns, though the repeated appearance of tariff-related tensions continues to keep markets on edge.

On the data front, China released its manufacturing PMI earlier today, which came in worse than expected and fell below the critical 50 mark, signaling contraction in the sector. This disappointing release added to global economic concerns, particularly as China’s recovery remains a key factor for global growth. Later today, markets will turn their attention to a speech from SNB Chairman Schlegel, which could provide further insights into the economic outlook.

Currency markets are reflecting a flight to safety in response to the equity market turbulence. Traditional safe-haven currencies such as the Japanese yen, U.S. dollar, and Swiss franc are gaining strength, which is typical during periods of risk aversion. On the other hand, risk-sensitive currencies are under pressure as traders seek stability amid uncertainty.

The commodities market is equally volatile, with significant moves across the board. Gold is bucking the trend, performing well as investors turn to the precious metal for safety. However, other metals have seen declines, with broad weakness in the sector. Oil, in particular, has suffered a significant drop, extending its recent losses as demand concerns weigh on the market.

Source: https://www.axiory.com/analytics/market-news/tech-bubble-fears-and-tariff-drama-spark-monday-vo