Canadian and U.S. stock markets fell sharply on Monday, driven by heavy losses in the technology sector following the unveiling of a competitive AI product by Chinese startup DeepSeek. The S&P 500 dropped 88.96 points, or 1.5%, to close at 6,012.28, while the Nasdaq composite plunged over 3%, losing 612.47 points to settle at 19,341.83. In contrast, the Dow Jones rose 289.33 points to 44,713.58.
In Canada, the S&P/TSX composite index slid 179.34 points to 25,289.15. According to Allan Small, senior investment adviser at iA Private Wealth, the market’s volatility reflects its current state as a “coiled spring,” ready to react to global developments.
The market shock came after DeepSeek revealed an AI model that could rival U.S.-based technologies at a fraction of the cost, challenging assumptions about the cost and energy demands of AI infrastructure. Companies like Nvidia, Microsoft, and Alphabet faced steep declines, with Nvidia’s shares plummeting nearly 17%. Meanwhile, Constellation Energy dropped 21% after announcing plans to restart a nuclear plant to power Microsoft’s data centers.
While tech stocks have surged in recent years, some corrections are natural, said Small, as uncertainty looms. Investors now face the question: is this a buying opportunity or a sign to wait?
Apple, Meta, Microsoft, and Tesla are set to report earnings this week, with the Bank of Canada and U.S. Federal Reserve also preparing interest rate announcements on Wednesday. Market expectations point to a rate cut in Canada and a pause in the U.S., with central bank comments likely to influence investor sentiment further.
The Canadian dollar closed at 69.54 cents U.S., down from 69.75 cents on Friday. Commodity prices also slid, with crude oil down $1.49 to $73.17 per barrel and natural gas falling 20 cents to $3.25 per mmBTU. Gold and copper prices also dropped, with gold down $40.50 to $2,738.40 per ounce and copper losing nine cents to $4.23 per pound.
Source: Swifteradio.com
