President Donald Trump’s threat to impose huge tariffs on Colombia in retaliation for its refusal to accept deportation flights from the US was also unsettling markets.
The fear is that Trump could go full throttle also with tariffs planned for China and other major trading partners.
“US markets are likely to take centre stage today as a slump in the tech sector puts pressure on wider markets,” noted Joshua Mahony, analyst at traders Scope Markets.
Eyes on DeepSeek
Wall Street already took a hit Friday following the launch of the Chinese DeepSeek AI programme last week.
The firm said only US$5.6 million was spent developing the model.
The programme’s arrival has sparked competition fears, as US tech titans – including Nvidia, Meta and Alphabet – have made huge investments worth hundreds of billions of dollars into AI products that has sent their valuations soaring.
The US tech sector saw sharp falls today in stocks futures trading ahead of Wall Street’s reopening.
Just last week following his inauguration, Trump announced a US$500-billion venture to build infrastructure for AI in the US.
Tech and chip firms were among the big losers in Tokyo today as the Nikkei ended in negative territory, with Advantest down more than 8% and Tokyo Electron off almost 5%.
SoftBank, which is a key investor in Trump’s AI project, tumbled more than 8%.
The week also sees earnings from US big tech and interest-rate decisions from the Federal Reserve and European Central Bank, ahead of American inflation data.
Equities enjoyed a healthy run-up last week on the hope that Trump’s second administration would take a less hardball approach to global trade as he held off imposing stiff levies on China and other partners immediately on taking office, as he warned he would.
His comments that he would “rather not” hit Beijing, and a signal of openness to a trade deal added to the optimistic tone.
However, news Sunday that he would hit Colombian goods with a 25% tariff – rising to 50% next week – and revoke the visas of government officials set off alarm bells.
The move came after President Gustavo Petro blocked deportation flights from the US.
In response to Trump’s decision, Petro initially announced retaliatory levies of 25% on imports from the US.
But Bogota later backed down and agreed to accept the deported citizens, with foreign minister Luis Gilberto Murillo saying they had “overcome the impasse”.
“Actions speak louder than words. The situation with Colombia just shows how little it takes for Trump to use tariffs as a negotiation tool,” said Dane Cekov at Sparebank 1 Markets.
Gold – a haven investment in times of economic uncertainty – sat today just shy of its record high.