The global financial markets have been tumultuous since the start of last week, continuing into trading on Tuesday (January 28, 2025). The US Dollar, having experienced volatility yesterday, is now showing strength this morning. Consequently, the EUR/USD has dropped 621 points (62.1 pips) to 1.04280, while the GBP/USD has decreased by 628 points (62.8 pips) to 1.24362.
In contrast, the price of Gold is showing a rebound after it fell over US$ 30 (300 pips) yesterday. The Nasdaq has experienced extreme fluctuations, previously undergoing a crash of 1,142 index points, but has gradually trimmed its losses to close trading on Monday at 21,304. Compared to Friday’s close, the Nasdaq has plunged over 600 index points. This morning, the technology-focused index remains under pressure.
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The crash in the Nasdaq stemmed from a significant drop in Nvidia’s shares, which triggered wild movements in other markets. Nvidia plummeted by 17%, losing a staggering US$ 600 billion in market capitalization, marking the largest loss in the history of US stocks.
The selling pressure on Nvidia was triggered after a Chinese startup, DeepSeek, successfully became the most downloaded app on the US App Store, surpassing OpenAI. Surprisingly, the development costs for DeepSeek’s AI were significantly lower, leading to a sell-off of Nvidia shares, a major supplier of AI chips.
The crash suffered by the Nasdaq has driven an increased demand for safe haven assets, benefiting the US Dollar this time. Gold faced a decline due to profit taking, as it nearly set a new all-time high last Friday. Nevertheless, it remains possible that Gold, also regarded as a safe haven, might rebound today.
