HONG KONG, Jan 30 — Asian stocks remained mixed in a holiday-thinned trading session today as investors weighed strong tech earnings against lingering concerns over market valuations following the AI shockwave triggered by China’s DeepSeek.
With many markets closed for the Lunar New Year break, there was little reaction to the US Federal Reserve’s widely expected decision to hold interest rates steady. The central bank also signaled that further rate cuts were unlikely in the near term.
AI Disruption Sparks Volatility
Earlier this week, markets were rattled when DeepSeek unveiled a chatbot that reportedly rivals leading US AI models—despite significantly lower development costs. The announcement sent shockwaves through AI-heavy stocks, with Nvidia suffering a staggering $600 billion wipeout in market capitalization. Other major tech firms and chipmakers also took a hit, highlighting growing concerns over the sector’s valuation.
While some of these losses have since been pared back, uncertainty persists. “The AI sector remains under intense scrutiny, with bearish sentiment growing stronger,” said Stephen Innes of SPI Asset Management. “Concerns over inflated tech valuations were already a hot topic before Monday’s rout, and now skepticism is spreading rapidly.”
Tech Earnings Offer Some Relief
Despite the turbulence, Wall Street’s earnings season provided a mixed but largely positive update. Meta (Facebook’s parent company), IBM, and Tesla posted strong quarterly results, while Microsoft fell short of expectations. Investors are now turning their attention to Apple’s earnings, set for release on Thursday.
Asian markets reacted cautiously to Wall Street’s lead. Tokyo and Sydney registered gains, while Wellington, Manila, and Jakarta edged lower.
Fed Holds Steady, But Inflation Concerns Persist
The Federal Reserve’s decision to maintain interest rates had little immediate market impact. However, analysts noted a subtle shift in language—acknowledging that inflation “remains somewhat elevated” and omitting previous references to progress toward the 2% target.
Fed Chair Jerome Powell reinforced the cautious stance, stating, “With our policy stance significantly less restrictive than it had been, and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance.”
Meanwhile, former President Donald Trump renewed his attacks on the Fed, calling for an immediate rate cut. On his Truth Social platform, he accused policymakers of failing “to stop the problem they created with inflation.” Powell declined to engage with Trump’s remarks, saying the Fed would “wait and see” how potential tariff hikes, tax cuts, and regulatory rollbacks under a Trump administration might impact the economy.
As markets digest the latest developments, investors remain on edge, balancing optimism over earnings with caution over AI disruptions and monetary policy uncertainty.
