empty
28.01.2025 09:50 AM
Panic Triggered by DeepSeek News is Overestimated (Potential Rebound of S&P 500 CFD and Rise in Gold Prices)

Recent news from China regarding DeepSeek's advancements in artificial intelligence has triggered a significant drop in the shares of major tech companies in both Europe and the United States. This decline has raised concerns about America's technological dominance. Amid this uncertainty, investors have become increasingly risk-averse, leading to a surge in demand for government bonds in developed economies.

The breakthrough in Chinese AI technology has dealt a serious blow to the U.S. AI program introduced just a week ago by Donald Trump. In response to this disappointment, market participants began actively selling shares of companies such as Nvidia, Microsoft, and others. The sell-off quickly turned panic-driven, with investors seeking to hedge against high volatility, as indicated by the "fear index" (VIX). This resulted in increased purchases of U.S. Treasuries, which caused a sharp drop in yields.

Previously, the U.S. dollar had fallen below the 108.00 level on the ICE index but gained strength due to the rising demand for Treasuries. The dollar had shown growth in anticipation of Trump's economic reforms, including potential tariffs, and expectations of rising inflation in the U.S., which made further rate cuts seem unlikely. However, the increasing uncertainty stemming from mixed signals from the new administration has recently weighed on the dollar's performance.

As the Federal Reserve begins its two-day meeting today, the U.S. dollar is starting to recover its standing in the Forex market.

According to the dynamics of federal funds rate futures, the market predicts a 97.3% chance that the Federal Reserve will keep monetary policy unchanged, despite former President Trump's calls for further rate cuts. This expectation is unlikely to significantly impact the market, as it has already accounted for this possibility. Any major changes would only arise from unexpected statements by Federal Reserve Chair Jerome Powell, although no big surprises are anticipated. Powell's press conference is expected to reaffirm the Fed's current pause in rate decisions, emphasizing the risks of inflation and the uncertainties surrounding Trump's presidency.

Regarding the stock market, the panic observed on Monday seems excessive and driven by emotion. A recovery in demand for U.S. equities, as well as for cryptocurrencies, is anticipated. The economic policies of the 47th president are expected to bolster domestic economic growth and manufacturing, particularly in light of Europe's stagnation and rising tensions with China.

Forecast of the Day

This image is no longer relevant

This image is no longer relevant

#SPX

The S&P 500 futures CFD has partially recovered from yesterday's decline, which was influenced by news about DeepSeek's achievements. There is a possibility that the contract will continue to rise towards 6100.00 after consolidating above 6000.00.

GOLD

The price of gold has stabilized above 2735.20. Weakness in the dollar could lead to an increase in the price to 2662.00.

Pati Gani,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Where Have Dollar Buyers Gone?

Yesterday, President Donald Trump's statements about new trade tariffs were largely ignored by dollar buyers. However, risk-asset sellers were also notably absent. During his speech, Trump announced that he would

Jakub Novak 09:34 2025-02-19 UTC+2

Why Is the Cryptocurrency Market Under Pressure? (Potential Bitcoin Rise and Litecoin Decline)

If we look at the performance of major cryptocurrencies, their last notable price surge against the US dollar was observed at the conclusion of the US presidential election campaign. Many

Pati Gani 09:30 2025-02-19 UTC+2

What to Pay Attention to on February 19? A Breakdown of Fundamental Events for Beginners

There are a few scheduled macroeconomic events for Wednesday, but several important reports will be released. The most significant one is the UK Consumer Price Index (CPI) for January. Traders

Paolo Greco 07:06 2025-02-19 UTC+2

Overview of the GBP/USD Pair on February 19: The British Pound Has Also Exhausted Its Strength

The GBP/USD currency pair experienced a period of stagnation for most of Tuesday. On Monday evening and Tuesday morning, bulls attempted to push the pound sterling higher, but their efforts

Paolo Greco 04:19 2025-02-19 UTC+2

Overview of the EUR/USD Pair on February 19: The Euro is on the Verge of a Prolonged Flat Phase

On Tuesday, the EUR/USD pair once again showed little movement, which was expected. The only macroeconomic releases were two morning reports on economic expectations and sentiment in Germany

Paolo Greco 04:19 2025-02-19 UTC+2

Oil Market Awaits OPEC+ Decisions

Brent crude oil futures are currently trading around $75.00 per barrel, consolidating within a narrow range. The nearest resistance level is at $75.90, while support can be found around $74.20

Anna Zotova 23:32 2025-02-18 UTC+2

EUR/USD: A Turn South or a Pause Before a Breakout?

Last week, EUR/USD tested the 1.0515 level, marking its second attempt this year to break into the 1.05 range—the first occurred in January when buyers reached 1.0534. Both attempts failed

Irina Manzenko 23:32 2025-02-18 UTC+2

Update on gas market

The gas market has paused following a stunning rally recorded throughout last week. But we will discuss the technical outlook a bit later. First, Russian gas deliveries to Europe

Miroslaw Bawulski 12:42 2025-02-18 UTC+2

AUD/NZD. Analysis and Forecast

The AUD/NZD pair is showing a strong rebound from its more than one-week low around 1.1075, reached during the Asian session. Currently, spot prices are trading above 1.1130, marking

Irina Yanina 11:37 2025-02-18 UTC+2

XAU/USD. Analysis and Forecast

Gold continues to show intraday growth, confidently holding above the key $2900 level. Investors remain cautious due to the potential escalation of global trade tensions, driven by the protectionist policies

Irina Yanina 11:35 2025-02-18 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.