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In the US on Tuesday stocks recovered after the sharp sell-off following the emergence of China’s DeepSeek AI model that offers a lower cost alternative to the billions the US is spending in the AI space. The Nasdaq rallied 2.03%, the S&P500 climbed 0.92% and the Dow Jones ended the day up 0.31%. The DeepSeek AI sell-off on Wall St was due to social media buzz over the weekend around the Chinese startup unveiling a free open-source large language model of AI that it says took less than $6 million to build.

In Europe overnight, markets in the region also mostly rebounded on Tuesday in the in the wake of the global AI sell-off that spread through global markets on Monday. The STOXX 600 rose 0.5%, Germany’s DAX added 0.7%, the French CAC fell 0.12% and, in the UK, the FTSE100 ended the day up 0.35%.

Across the Asia region overnight, markets closed mixed as the AI-sell off continued to spread throughout the region. Japan’s Nikkei extended losses for a second session with a loss of 1.4% on Tuesday as China’s AI advancements threaten to challenge the US dominance in the space which flows through to countries like Japan who form a key part of the US AI-chip supply chain, while Hong Kong’s Hang Seng rose 0.14%, and South Korea’s Kospi Index ended the day up 0.85%.

The local market closed the first trading session of the week down 0.12% as fears of China’s AI rival DeepSeek taking power on the AI front dampened investor sentiment to start the holiday shortened trading week.

The datacentre, AI and broad tech rally of the last year took a sudden halt yesterday with local darlings in the sector like Goodman Group, and NextDC each falling over 6% amid the emergence of China’s DeepSeek AI rival and overvaluation fears in the sector.

The DeepSeek fear-based sell-off expanded into the uranium space, sending Paladin Energy and Boss Energy down over 10% each as investors fear less uranium will be needed to fuel nuclear power for the global AI revolution.

Sigma Healthcare rose over 12% yesterday after the Chemist Warehouse merger partner reported a strong trading update from Chemist Warehouse for the first half of FY25 including record sales, up 13% on the PCP, margin expansion through cost management and the opening of 19 new stores in the half. Sigma is set to merge with the discount chemist retail giant next month.

What to watch today:

• Ahead of the midweek session the SPI futures are anticipating the ASX will open the day up 0.43% tracking Wall Street’s rebound on Tuesday so far.
• On the commodities front this morning oil is trading 0.01% lower at US$73.17/barrel, gold is up 0.6% at US$2757.72/ounce and iron ore is flat at US$101.34/tonne.
• The Aussie dollar has slightly weakened against the greenback to buy US$0.62, 97.19 Japanese Yen, 50.22 British Pence, and NZ$1.10.

Trading Ideas:

• Bell Potter has slightly increased the 12-month price target on Bellevue Gold (ASX:BGL) from $1.90 to $2.00 and maintain a buy rating on the gold producer. Despite weaker 2Q production leading to a FY25 guidance downgrade, the analyst sees upside to the share price from continuing improvement in production and cost performance in ongoing production ramp-up and expansion, strong gold prices and near-mine exploration programs.
• And Trading Central has identified a bullish signal on Accent Group (ASX:AX1) following the formation of a pattern over a period of 37-days which is roughly the same amount of time the share price may rise from the close of $2.38 to the range of $2.75 to $2.85 according to standard principles of technical analysis.