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

USD/CAD: Will the Pair Continue Its Rally Near Multi-Week Highs?

The USD/CAD pair remains near multi-week highs as it extends its positive momentum for the sixth consecutive day, supported by a breakout above the 50-day Simple Moving Average (SMA). Spot

Irina Yanina 10:49 2025-02-28 UTC+2

The Risk of U.S. Economic Stagflation Resurfaces (Potential Decline in Bitcoin and Rise in #USDX)

Earlier reports indicated that the U.S. president had decided to delay the implementation of tariffs on Canada and Mexico from March 4 to April 2, providing a temporary sense

Pati Gani 09:34 2025-02-28 UTC+2

Stock market throws in towel

Trouble never comes alone. The S&P 500 plunged to its lowest levels since mid-January as Donald Trump reignited tariff threats. First, negative economic data from the US, then NVIDIA's earnings

Marek Petkovich 08:49 2025-02-28 UTC+2

What to Pay Attention to on February 28? A Breakdown of Fundamental Events for Beginners

Friday's economic calendar is packed with events, but none are particularly critical. In Germany, reports on unemployment, inflation, and retail sales will be released. While these figures are significant locally

Paolo Greco 06:52 2025-02-28 UTC+2

GBP/USD Pair Overview – February 28: Who Cares About the Economy When There's Trump?

The GBP/USD currency pair continues to rise gradually, even though there is no substantial reason for this movement this week. While the British pound has not experienced significant appreciation during

Paolo Greco 02:49 2025-02-28 UTC+2

EUR/USD Pair Overview – February 28: The European Union Awaits a New Economic Blow

The EUR/USD currency pair maintained its movement pattern on Thursday, continuing to trade within a sideways channel on the hourly timeframe for most of the day. Even the news that

Paolo Greco 02:49 2025-02-28 UTC+2

The Dollar Is Currently Facing Significant Challenges

Concerns about the state of the US economy are hindering bearish sentiment in the market for EUR/USD. According to Danske Bank, the major currency pair lacks serious catalysts to move

Marek Petkovich 23:34 2025-02-27 UTC+2

Yen Continues to Target Further Strengthening

The dollar received a significant boost on Thursday following the release of the second GDP estimate for Q4, which reported an economic growth rate of 2.3%. While this figure

Kuvat Raharjo 23:01 2025-02-27 UTC+2

XAU/USD. Analysis and Forecast

Gold continues to trade lower today, falling to a two-week low around $2,880. A modest increase in U.S. Treasury yields is strengthening the U.S. dollar, helping it rebound from

Irina Yanina 11:27 2025-02-27 UTC+2

AUD/JPY: Analysis and Forecast

The AUD/JPY pair's rate is attempting to hold slightly above the 94.00 level, its lowest point since September 2024. Investors are increasingly confident that the Bank of Japan (BoJ) will

Irina Yanina 11:19 2025-02-27 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.