In the US on Monday the S&P500 and Nasdaq fell sharply to start the week lower on investor concerns about the AI bubble bursting due to the emergence of Chinese startup DeepSeek which has possibly made a competitive AI model for a fraction of the cost of the billions Silicon Valley is spending in the space. The Nasdaq tumbled 3.07% and the S&P500 lost 1.46%, while the Dow Jones ended the day down 0.65%.

European markets closed slightly lower on Monlday as investors reacted to the breakout of a new Chinese AI competitor. The STOXX 600 fell 0.07%, Germany’s DAX lost 0.53%, the French CAC fell 0.27% and, in the UK, the FTSE100 ended the day flat.

Across the Asia region, markets closed mostly higher on industrial profits in China and on the emergence of an AI rival in China. Japan’s Nikkei fell 0.92% in the days after the Bank of Japan increased the country’s cash rate to the highest level in 17-years, while Hong Kong’s Hang Seng rose 0.66%, China’s CSI index added 0.41% and South Korea’s Kospi Index gained 0.85%. China’s industrial profits jumped 11% from on the PCP, but for the year profits declined for a third straight year in data out yesterday for the month of December.

The local market was closed on Monday for the Australia Day holiday but on Friday the ASX200 posted a 0.36% gain on Friday to end a strong week on the local index following strength in the US on Thursday and strong corporate earnings reports boosting investor sentiment.

Synlait Milk soared 24% on Friday after reporting an impressive turnaround in operations in the first half and increased its guidance for the second half, with an outlook to a return to profitability this year. The milk producer underwent an aggressive cost cutting strategy through reducing head count and is set to increase prices to drive margin appreciation in the second half.

Oil producers locally on Friday tumbled tracking the declining price of oil amid Trump’s comments urging OPEC plus to bring down the price of oil.

What to watch today:

• Ahead of the first trading session of the new trading week the SPI futures are anticipating the ASX will open the day up 0.17%.
• On the commodities front this morning oil is trading 2.06% lower at US$73.14/barrel, gold is down 1.05% at US$2741/ounce and iron ore is flat at US$101.34/tonne.
• The Aussie dollar has strengthened overnight against the greenback to buy 62.85 US cents, 97.24 Japanese Yen, 50.28 British Pence and 1 New Zealand dollar and 11 cents.

Trading Ideas:

• Bell Potter has slightly decreased the 12-month price target on Kogan.com (ASX:KGN) from $5.30 to $5.10 and maintain a hold rating on the online retailer following the release of the company’s preliminary 1H25 update including adjusted EBITDA missing expectations driven by an incremental increase in marketing investment during the promo period and the Mighty Ape re-platforming related issues which persisted through October.
• And Trading Central has identified a bearish signal on Healius (ASX:HLS) following the formation of a pattern over a period of 290-days which is roughly the same amount of time the share price may fall from the close of $1.41 to the range of $0.70 to $0.85 according to standard principles of technical analysis.