EUROPEAN EQUITY UPDATE: Softer trade with tech hit on China's low-cost high-performing AI model

STOXX 600: -1.4%

European bourses are almost entirely in the red amid the fallout from disappointing Chinese PMI data overnight, Trump's tariff announcement on Colombia, and with Chinese start-up DeepSeek threatening US dominance in the AI sector with a low-cost model on par with OpenAi's o1.
The tech sector is particularly hit on the latter as DeepSeek claims to reduce training costs from USD 100mln to USD 5mln while matching or surpassing OpenAI's GPT-o1 and Anthropic's Claude AI on many tasks - and with a fraction of the GPUs. Furthermore, DeepSeek can run on gaming GPUs instead of expensive data centre hardware, which all-in-all poses a threat to NVIDIA’s high-margin GPU business.
Dutch AEX (-1.4%) lags on the back of the broader decline in the tech, with ASML (-9.3%), and ASM International (-9.7%) plumbing the depths.
The low-cost AI training also poses a threat to the energy demand expected to power the data centre hardware at a time of AI growth, with the likes of Siemens Energy (-17%) and Schneider Electric (-8%) also posting steep losses.
UK's FTSE 100 (-0.3%) is more cushioned given its lack of exposure to the tech sector.

Sectors:

Mixed with a clear defensive bias amid the broader risk aversion.
Utilities, Food beverages & Tobacco, Telecoms, Optimised Personal Care Drug & Grocery, and Real Estate reside in the green and towards the top of the pack.
Technology and Industrial Goods & Services underperform on the aforementioned DeepSeek story and its implications.
Basic Resources and Energy are pressured by subdued prices post-Chinese PMIs and amid US President Trump's tariff rhetoric.

Individual Movers:

Anglo American (-6%) falls after BHP reportedly cooled on returning with another bid for Anglo American, via FT citing sources; as the upside seen in Anglo American shares means the deal is now too expensive.
Rolls-Royce (-2.9%) is lower as UK PM Starmer is expected to resist pressure from US President Trump to increase defence spending amid concerns surrounding public finances, according to The Times citing sources.
Diageo (-0.6%) dismissed speculation about selling Guinness or its Moet Hennessy stake, Reuters reports. Guinness outperformed Diageo’s spirits segment, with strong sales growth, including its zero-alcohol variant. Updates are expected in Diageo’s interim results, due February 4th.
Ryanair (+3.8%) rises after its Q3 Update (in EUR): Profit 149mln (exp. 60mln), Average Fares +1%. Q4 comp Y/Y is "very challenging". Boeing (BA) delays mean that the FY26 target has been revised to 206mln (prev. 210mln),

US Equity Futures: ES -1.9%, NQ -3.2%, RTY -0.9%, YM -0.9%

Lower across the board with hefty losses seen in the NQ (-3.2%), mostly on the back of NVIDIA (-8.5% pre-market), after Chinese startup DeepSeek announced its low-cost model which matches or surpasses OpenAI's GPT-4 and Anthropic's Claude AI on many tasks - and with a fraction of the GPUs - with Microsoft (-3.9% pre-market) also lower as US AI dominance is questioned.
Ahead this week, the FOMC on Wednesday will be the main event and is expected to hold rates at between 4.25-4.50% at its January 29th confab, according to all 103 economists surveyed by Reuters.
Stateside earnings will also pick up this week with a deluge of mega-cap earnings with highlights including META, MSFT, TSLA, and AAPL.