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By Nikhil Sharma<\/p>\n
(Reuters) -European shares slid on Monday as the technology sector joined the retreat in other markets after China’s upgraded low-cost, low-power artificial intelligence (AI) model sparked worries about the profits of rivals and the need for costly chips.<\/p>\n
The pan-European was down 0.6% as of 0941 GMT, tracking a move lower in global equities. Futures tracking the tech-heavy U.S. tumbled 3.1%. <\/p>\n
Chinese startup DeepSeek has rolled out a free assistant that it says uses lower-cost chips and less data, seemingly challenging a widespread bet in financial markets that AI will drive demand along a supply chain from chipmakers to data centres.<\/p>\n
The news rattled European tech index , which slid 5.8% and was on track for its worst day since October 15. <\/p>\n
Chip equipment maker ASML (AS:) slid 11.5% to a near nine-week low, while ASM International slumped over 15%.<\/p>\n
Siemens <\/span><\/span> (ETR:) Energy, which provides electric hardware for AI infrastructure, sank 17.4% to the bottom of STOXX 600, while other AI-exposed firms such as Schneider Electric (EPA:) dropped 8.1%.<\/p>\n “This idea of a low cost Chinese version hasn’t necessarily been forefront, so it’s taken the market a little bit by surprise,” said Fiona Cincotta, senior market analyst at City Index.<\/p>\n “So if you suddenly get this low-cost AI model, then that’s going to raise concerns over the profits of rivals, particularly given the amount that they’ve already invested in more expensive AI infrastructure.” <\/p>\n The selloff also comes ahead of major tech earnings on Wall Street, with trillion-dollar firms like Apple (NASDAQ:), Meta (NASDAQ:), Microsoft (NASDAQ:) and Tesla (NASDAQ:) expected to post their quarterly earnings this week that should justify their overblown valuations.<\/p>\n With only a few days remaining before the U.S. President Trump’s Feb. 1 deadline for imposing significant trade tariffs on key trading partners, market uncertainty has intensified, adding to an already turbulent week for investors.<\/p>\n The week ahead is also packed with key interest rate decisions by central banks around the globe, particularly the policy verdicts from U.S. Federal Reserve and European Central Bank.<\/p>\n For the ECB, market participants have already priced in a quarter point cut, while they expect the Fed to keep rates on hold.<\/p>\n Fourth-quarter gross domestic product numbers for the euro zone and Germany, along with inflation data for major European economies, are also part of a data-loaded week.<\/p>\n On the day, German business morale unexpectedly improved in January thanks to a more positive assessment of the current economic situation.<\/p>\n <\/p>\n Among other stocks, Ryanair (NASDAQ:) added 4.8% after the low-cost carrier posted a bigger-than-expected quarterly profit.<\/p>\n UMG (AS:) jumped 5.2% to a six-month high after the world’s biggest music label announced a new agreement with audio-streaming giant Spotify.<\/p>\n<\/p><\/div>\n