Asian stock markets showed mixed results on Tuesday amid light Lunar New Year trading, following a decline in U.S. tech stocks, reports AP.

This drop occurred after a Chinese competitor entered the AI market, casting doubt on the recent tech frenzy. Japan's Nikkei 225 fell 1.5% to 38,959.05, while Australia’s S&P/ASX 200 remained relatively stable, edging down 0.1% to 8,399.10. Hong Kong’s Hang Seng rose slightly by 0.1% to 20,225.11. Other markets, including South Korea and Shanghai, were closed for holidays.

Indices rise in early trading in stock markets

In Japan, SoftBank Group’s stock fell another 6%, Hitachi dropped 7%, but Fujitsu and Sony saw recoveries. Tokyo Electron, a chip maker, declined by 5.5%. Fuji Media Holdings, involved in a scandal, gained 1% following an extensive press conference where executives took responsibility, and two resigned. The company’s stock has fluctuated due to reports linking an anchorwoman to a scandal with a male Japanese celebrity, who later retired.

In the U.S., the S&P 500 dropped 1.5% to 6,012.28, mainly due to a 16.9% fall in Nvidia’s stock. Other major tech companies also lost value, with the Nasdaq falling 3.1% to 19,341.83, its worst loss in over a month. The Dow Jones rose 0.7% to 44,713.58, and most U.S. stocks performed better, but tech-heavy index funds, such as the S&P 500, were hit hard due to the influence of major tech companies.

The source of the market turbulence was a Chinese AI firm, DeepSeek, which unveiled a language model that could rival U.S. companies at potentially a lower cost. DeepSeek's app quickly topped the Apple App Store’s free apps chart, despite U.S. restrictions on Chinese access to top AI chips. However, analysts remain uncertain about how the model was developed due to these restrictions.

DeepSeek's entry into the market has caused significant disruption, challenging the dominance of AI-related companies that have flourished in recent years. Nvidia, for instance, saw its stock soar from under $20 to over $140 in under two years. A select group of seven major companies, including Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla, dominate the S&P 500, with these companies accounting for over half of the index’s returns last year.

Tech stocks slide as Chinese rival threatens AI industry; Nvidia falls 17% 

Investors are also awaiting earnings reports later this week from Apple, Meta Platforms, Microsoft, and Tesla.

In commodity markets, U.S. crude rose by 36 cents to $73.53 per barrel, and Brent crude gained 42 cents to $77.50. In currency trading, the U.S. dollar strengthened to 155.71 yen from 154.51, while the euro dropped to $1.0441 from $1.0493.