<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108099828-1739169444276-gettyimages-2163265359-raa-arcelorm240727_npbCh-820x462.png" alt="" class="wp-image-584668" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108099828-1739169444276-gettyimages-2163265359-raa-arcelorm240727_npbCh-820x462.png 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108099828-1739169444276-gettyimages-2163265359-raa-arcelorm240727_npbCh-300x169.png 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108099828-1739169444276-gettyimages-2163265359-raa-arcelorm240727_npbCh-160x90.png 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108099828-1739169444276-gettyimages-2163265359-raa-arcelorm240727_npbCh-768x432.png 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108099828-1739169444276-gettyimages-2163265359-raa-arcelorm240727_npbCh.png 1480w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">The ArcelorMittal steel production plant in Ghent, Belgium, on July 27, 2024.  Jonathan Raa | Nurphoto | Getty Images</figcaption></figure>



The excitement over artificial intelligence and U.S. President Donald Trump’s perceived friendliness to the stock market buoyed investor sentiment as recently as December. In 2025, it seems those animal spirits have somewhat evaporated.



Any time Trump brings up tariffs, investors have been reacting badly (for good reason). His threat of reciprocal tariffs on Friday — that is, imposing on other countries the same degree of duties that they place on the U.S. — sent stocks tumbling. New tariffs on steel and aluminum, which Trump says he will announce on Monday, are likely to sink stocks further.



Likewise, AI, the engine that drove stocks higher in 2024, seems to present investors with more uncertainty than opportunities this year. DeepSeek’s claim that its training required just a fraction of the billions of dollars that U.S. AI models suck up have thrown Big Tech’s investments — which will amount to more than $300 billion in 2025 — as well as their stock valuation into question.



While the main characters of the stock market remain the same as they were in December, they are steering markets in a different direction.



<h2 class="wp-block-heading" id="h-what-you-need-to-know-today"><a></a>What you need to know today</h2>



New steel and aluminum tariffs Trump will announce on Monday additional 25% tariffs on all aluminum and steel imports into the U.S., according to comments to reporters on Sunday. Those will come on top of already existing levies. In a separate steel-related development, Trump said on Friday at a news conference with Japanese Prime Minister Shigeru Ishiba that Nippon Steel will invest in U.S. Steel, giving up its attempt to buy it. 



EV price cuts in China amid mixed price signals Consumer prices in China spiked 0.5% in January on an annual basis, according to the country’s National Bureau of Statistics on Sunday. The figure is higher than the previous month’s 0.1% increase and the 0.4% expected in a Reuters poll. However, producer prices dropped 2.3% in January year on year — the same degree as December and steeper than the 2.1% estimate — for their 28th straight month of declines. Meanwhile, electric car companies in China are offering discounts and interest-free loans to boost sales amid a hotly contested industry and sluggish consumer sentiment in the country.



Uneven report for U.S. labor market The U.S. economy added 143,000 jobs in January, the Bureau of Labor Statistics reported Friday. Nonfarm payrolls for the month dropped from an upwardly revised 307,000 in December was and below the Dow Jones 169,000 estimate. However, the unemployment rate edged down to 4% from 4.1% the prior month. Average hourly earnings in January were stronger than expected, coming in at 0.5% for the month compared with the 0.3% forecast.



Asian markets rise as U.S. slumps All major U.S. indexes ended last week lower after a losing day on Friday, when the S&amp;P 500 lost 0.95%, the Dow Jones Industrial Average slid 0.99% and the Nasdaq Composite fell 1.36%. Stocks retreated after Trump mentioned the possibility of reciprocal tariffs on trade partners. By contrast, Asia-Pacific markets started the week higher. Hong Kong’s Hang Seng Index added around 1.8%. Singapore’s Straits Times Index hit an all-time high, lifted by shares of Singapore’s largest bank DBS Group Holdings, which jumped 2.6% and touched a new record.



Spending billions on artificial intelligence SoftBank is close to finalizing a $40 billion primary investment in OpenAI at a $260 billion pre-money valuation, sources told CNBC’s David Faber. The cost efficiency of DeepSeek doesn’t seem to deter Big Tech: Meta, Amazon, Alphabet and Microsoft have announced plans to spend a combined $320 billion on AI and data centers. Demis Hassabis, the CEO of Google DeepMind, said on Friday that while DeepSeek is “the best work” he’s seen from China, “there’s no actual new scientific advance.”



[PRO] Inflation in focus this week The consumer and producer price indexes for January, out Wednesday and Thursday respectively, will be especially important to investors. January’s jobs report showed a higher-than-anticipated wage growth and the University of Michigan consumer survey revealed that respondents increased their expectations of the inflation rate a year to 4.3%, a one percentage point jump from January.



<h2 class="wp-block-heading" id="h-and-finally"><a></a>And finally&#8230;</h2>



The world isn’t close to breaking free from coal — in some countries, demand for it is surging



“Nothing can destroy coal,” U.S. President Donald Trump&nbsp;said at the recent World Economic Forum. Statistics seem to prove him right. U.S. exports of coal&nbsp;have been rising steadily to satisfy growing global demand — which is expected to have breached another high of 8.77 billion tonnes in 2024 and will remain at similar levels until 2027, the&nbsp;International Energy Agency&nbsp;predicted. “The global shift away from coal remains challenging, largely driven by rising demand in Asia, even as Europe and the U.S. see significant declines in coal consumption,” said Dorothy Mei, project manager for Global Energy Monitor’s Global Coal Mine Tracker.

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108098965-1738890135390-gettyimages-2197382389-city_bank-10-06-02-2025-820x461.jpeg" alt="" class="wp-image-583564" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108098965-1738890135390-gettyimages-2197382389-city_bank-10-06-02-2025-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108098965-1738890135390-gettyimages-2197382389-city_bank-10-06-02-2025-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108098965-1738890135390-gettyimages-2197382389-city_bank-10-06-02-2025-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108098965-1738890135390-gettyimages-2197382389-city_bank-10-06-02-2025-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108098965-1738890135390-gettyimages-2197382389-city_bank-10-06-02-2025-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108098965-1738890135390-gettyimages-2197382389-city_bank-10-06-02-2025.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">The Bank of England on 6 Feb. 2025, in London, England. Richard Baker | In Pictures | Getty Images</figcaption></figure>



On Friday, the Reserve Bank of India trimmed its repo rate by 25 basis points. A day prior, the Bank of England lowered interest rates by 25 basis points, following the European Central Bank’s cut of the same amount on Jan. 30.



Many economies seem to be settling into a lower-rate environment as policymakers look to boost economic growth. That’s in stark contrast with the U.S. — it’s unclear if the U.S. Federal Reserve would even deliver on its two rate cuts in 2025, forecast in December, given the uncertainties over the economic impact of U.S. President Donald Trump’s policies. Moreover, Trump seems to have backed off from applying pressure on the Fed.



Ahead of Trump’s inauguration, the&nbsp;U.S. dollar began strengthening and hit its highest level in more than two years, as measured by the U.S. dollar index. That’s already affected companies such as Amazon, which blamed the currency for weighing down its expected revenue in the current quarter.



The U.S. might have an edge over other economies and stock markets for now, but an edge can cut both ways.



<h2 class="wp-block-heading" id="h-what-you-need-to-know-today"><a></a>What you need to know today</h2>



India’s first rate cut in nearly five years The Reserve Bank of India cut its repo rate by 25 basis points to 6.25%, Governor Sanjay Malhotra said in a livestreamed address Friday. The move, which was expected by economists, was the first time in nearly five years the central bank has lowered rates. The RBI forecast real economic growth to come in at 6.4% for the current fiscal year, the country’s lowest in four years, and 6.7% for fiscal year 2025-26.



Bank of England trims rates The Bank of England lowered its benchmark interest rate by 25 basis points to 4.5%, its first cut of the year. All members of the monetary policy committee voted to lower rates, but two out of nine had voted for a larger cut of 50 basis points. Central bank governor Andrew Bailey said he expects more cuts this year. The BOE also halved its growth forecast for the U.K.’s economy in 2025 to 0.75% from 1.5%.



Disappointing guidance from Amazon Amazon shares fell more than 4% after giving disappointing revenue guidance for the current quarter, citing difficulties posed by a strong U.S. dollar. It also announced plans to spend $100 billion in capital expenditures in 2025, mostly on artificial intelligence infrastructure. The tech giant beat earnings and revenue expectations for the fourth quarter — and is poised to surpass Walmart as the S&amp;P 500 company with the highest quarterly revenue.



Consecutive gains for S&amp;P 500 On Thursday, the S&amp;P 500 advanced 0.36% for its third consecutive winning day, while the Nasdaq Composite climbed 0.51%. The Dow Jones Industrial Average, however, lost 0.28%. Japan’s Nikkei 225 retreated around 0.6% after the country’s household spending in December unexpectedly jumped on an annual basis, while India’s Nifty 50 was around the flatline after the RBI trimmed interest rates.



Trump’s focusing on yields, not rates The Trump administration is focusing on using fiscal policy to keep the 10-year Treasury yield low and isn’t “calling for the Fed to lower rates,” Treasury Secretary Scott Bessent said in a Wednesday interview with Fox News. That marks a shift from Trump’s original plan to “demand that interest rates drop immediately.”



[PRO] IBM outperforms Nvidia Not Nvidia, not Apple and not Amazon — the best-performing stock in the Dow over the past three months has been IBM, which climbed 27%. However, the tech company needs to do more in the field of artificial intelligence for its stock to continue performing well, according to one chief investment officer.



<h2 class="wp-block-heading" id="h-and-finally"><a></a>And finally&#8230;</h2>



 How Calvin Klein and Tommy Hilfiger got caught in Trump’s trade war with China



China has blacklisted the owner of Calvin Klein and Tommy Hilfiger, which could force the company to shut down stores and manufacturing in the country, in an early repercussion of Trump’s trade war. While China’s Ministry of Commerce began investigating PVH September for allegedly refusing to source cotton from the Xinjiang region, which has become notorious for its Uyghur detention camps, Beijing officially placed the company on its list of “unreliable entities” on Tuesday.

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K-pop group NewJeans changes name to NJZ

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="562" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/GettyImages-2196255677-820x562.jpg" alt="" class="wp-image-579752" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/01/GettyImages-2196255677-820x562.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/GettyImages-2196255677-300x206.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/GettyImages-2196255677-131x90.jpg 131w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/GettyImages-2196255677-768x526.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/GettyImages-2196255677-1536x1053.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/01/GettyImages-2196255677-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">SAN ANSELMO, CALIFORNIA &#8211; JANUARY 27: In this photo illustration, the DeepSeek app is displayed on an iPhone screen on January 27, 2025 in San Anselmo, California. Newly launched Chinese AI app DeepSeek has surged to number one in Apple&#8217;s App Store and has triggered a sell-off of U.S. tech stocks over concerns that Chinese companies&#8217; AI advances could threaten the bottom line of tech giants in the United States and Europe. (Photo Illustration by Justin Sullivan/Getty Images)</figcaption></figure>



DeepSeek has rattled the U.S.-led AI ecosystem with its latest model, shaving hundreds of billions in chip leader Nvidia’s market cap. While the sector leaders grapple with the fallout, smaller AI companies see an opportunity to scale with the Chinese startup.



Several AI-related firms told CNBC that DeepSeek’s&nbsp;emergence is a “massive” opportunity for them, rather than a threat.&nbsp;



“Developers are very keen to replace OpenAI’s expensive and closed models with open source models like DeepSeek R1&#8230;” said Andrew Feldman, CEO of artificial intelligence chip startup Cerebras Systems.



The company competes with Nvidia’s graphic processing units and offers cloud-based services through its own computing clusters. Feldman said the release of the R1 model generated one of Cerebras’ largest-ever spikes in demand for its services.&nbsp;



“R1 shows that [AI market] growth will not be dominated by a single company — hardware and software moats do not exist for open-source models,” Feldman added.&nbsp;



Open source refers to software in which the source code is made freely available on the web for possible modification and redistribution. DeepSeek’s models are open source, unlike those of competitors such as OpenAI.



DeepSeek also claims its R1 reasoning model rivals the best American tech, despite running at lower costs and being trained without cutting-edge graphic processing units, though industry watchers and competitors have questioned these assertions.



“Like in the PC and internet markets, falling prices help fuel global adoption. The AI market is on a similar secular growth path,” Feldman said.&nbsp;



<h2 class="wp-block-heading" id="h-inference-chips-nbsp"><a></a>Inference chips&nbsp;</h2>



DeepSeek could increase the adoption of new chip technologies by accelerating the AI cycle from the training to “inference” phase, chip start-ups and industry experts said.



Inference refers to the act of using and applying AI to make predictions or decisions based on new information, rather than the building or training of the model.



“To put it simply, AI training is about building a tool, or algorithm, while inference is about actually deploying this tool for use in real applications,” said Phelix Lee, an equity analyst at Morningstar, with a focus on semiconductors.&nbsp;&nbsp;



While Nvidia holds a dominant position in GPUs used for AI training, many competitors see room for expansion in the “inference” segment, where they promise higher efficiency for lower costs.



AI training is very compute-intensive, but inference can work with less powerful chips that are programmed to perform a narrower range of tasks, Lee added.



A number of AI chip startups told CNBC that they were seeing more demand for inference chips and computing as clients adopt and build on DeepSeek’s open source model.&nbsp;



″[DeepSeek] has demonstrated that smaller open models can be trained to be as capable or more capable than larger proprietary models and this can be done at a fraction of the cost,” said Sid Sheth, CEO of AI chip start-up d-Matrix.&nbsp;



“With the broad availability of small capable models, they have catalyzed the age of inference,” he told CNBC, adding that the company has recently seen a surge in interest from global customers looking to speed up their inference plans.&nbsp;



Robert Wachen, co-founder and COO of AI chipmaker Etched, said dozens of companies have reached out to the startup since DeepSeek released its reasoning models.



“Companies are [now] shifting their spend from training clusters to inference clusters,” he said.&nbsp;



“DeepSeek-R1 proved that inference-time compute is now the [state-of-the-art] approach for every major model vendor and thinking isn’t cheap &#8211; we’ll only need more and more compute capacity to scale these models for millions of users.”



<h2 class="wp-block-heading"><a></a>Jevon’s Paradox&nbsp;</h2>



Analysts and industry experts agree that DeepSeek’s accomplishments are a boost for AI inference and the wider AI chip industry.&nbsp;



“DeepSeek’s performance appears to be based on a series of engineering innovations that significantly reduce inference costs while also improving training cost,” according to a report from Bain &amp; Company.



“In a bullish scenario, ongoing efficiency improvements would lead to cheaper inference, spurring greater AI adoption,” it added.&nbsp;



This pattern explains Jevon’s Paradox, a theory in which cost reductions in a new technology drive increased demand.



Financial services and investment firm Wedbush said in a research note last week that it continues to expect the use of AI across enterprise and retail consumers globally to drive demand.



Speaking to CNBC’s “Fast Money” last week, Sunny Madra, COO at Groq, which develops chips for AI inference, suggested that as the overall demand for AI grows, smaller players will have more room to grow.



“As the world is going to need more tokens [a unit of data that an AI model processes] Nvidia can’t supply enough chips to everyone, so it gives opportunities for us to sell into the market even more aggressively,” Madra said.

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108086939-17369536122025-01-15t144123z_1142336854_rc2u5cau9h9e_rtrmadp_0_usa-china-820x461.jpeg" alt="" class="wp-image-583160" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108086939-17369536122025-01-15t144123z_1142336854_rc2u5cau9h9e_rtrmadp_0_usa-china-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108086939-17369536122025-01-15t144123z_1142336854_rc2u5cau9h9e_rtrmadp_0_usa-china-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108086939-17369536122025-01-15t144123z_1142336854_rc2u5cau9h9e_rtrmadp_0_usa-china-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108086939-17369536122025-01-15t144123z_1142336854_rc2u5cau9h9e_rtrmadp_0_usa-china-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108086939-17369536122025-01-15t144123z_1142336854_rc2u5cau9h9e_rtrmadp_0_usa-china-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2025/02/108086939-17369536122025-01-15t144123z_1142336854_rc2u5cau9h9e_rtrmadp_0_usa-china.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019. Aly Song | Reuters</figcaption></figure>



BEIJING — China has toughened its tone following the Trump administration’s opening salvo of trade tariffs.



“In the face of one-sided acts of bullying, [China] will definitely take necessary measures to firmly protect its own rights and interests,” Chinese Ministry of Commerce Spokesperson He Yongqian told reporters Thursday, according to a CNBC translation.



She added that China would not provoke trade disputes and remained ready to resolve problems through discussions. Beijing’s official commentary previously emphasized the willingness to negotiate.



China’s Ministry of Foreign Affairs Spokesperson Lin Jian struck conveyed a similar mood on Wednesday.



“China firmly deplores and opposes the move of the U.S. to levy a 10 percent additional tariff on Chinese imports under the pretext of the fentanyl issue,” he said, according to an official English translation. “The measures China has taken are what’s needed for safeguarding our legitimate rights and interests.”



CNBC has reached out to the U.S. State Department for comment.



The official remarks came just days after the U.S. announced 10% tariffs on Chinese goods, to which the Chinese side on Tuesday retaliated with its own duties of up to 15% on U.S. liquefied natural gas and select products, starting Feb. 10.



The U.S. also halted a so-called de minimis exemption, making it more expensive for Chinese e-commerce merchants to ship products directly to U.S. consumers.



Ministry of Commerce spokesperson He on Thursday urged the U.S. to create a “fair and predictable” environment for cross-border e-commerce.

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