BEIJING (Reuters) – Chinese startup DeepSeek’s AI Assistant on Monday overtook rival ChatGPT to become the top-rated free application available on Apple (NASDAQ:AAPL)’s App Store in the United States.

Powered by the DeepSeek-V3 model, which its creators say “tops the leaderboard among open-source models and rivals the most advanced closed-source models globally”, the artificial intelligence application has surged in popularity among U.S. users since it was released on Jan. 10, according to app data research firm Sensor Tower.

The milestone highlights how DeepSeek has left a deep impression on Silicon Valley, upending widely held views about U.S. primacy in AI and the effectiveness of Washington’s export controls targeting China’s advanced chip and AI capabilities.

AI models from ChatGPT to DeepSeek require advanced chips to power their training. The Biden administration has since 2021 widened the scope of bans designed to stop these chips from being exported to China and used to train Chinese firms’ AI models.

However, DeepSeek researchers wrote in a paper last month that the DeepSeek-V3 used Nvidia (NASDAQ:NVDA)’s H800 chips for training, spending less than $6 million.

Although this detail has since been disputed, the claim that the chips used were less powerful than the most advanced Nvidia products Washington has sought to keep out of China, as well as the relatively cheap training costs, has prompted U.S. tech executives to question the effectiveness of tech export controls.

Little is known about the company behind DeepSeek, a small Hangzhou-based startup founded in 2023, when search engine giant Baidu (NASDAQ:BIDU) released the first Chinese AI large-language model.

Since then, dozens of Chinese tech companies large and small have released their own AI models, but DeepSeek is the first to be praised by the U.S. tech industry as matching or even surpassing the performance of cutting-edge U.S. models.

Investing.com– U.S. President Donald Trump’s proposed trade tariffs against Colombia are now on hold after Bogota agreed to accept migrants deported from the U.S., the Associated Press reported on Sunday. 

Trump had threatened to impose 25% tariffs on all Colombian imports after the country refused two U.S. military planes carrying migrants from landing in the country. 

The Colombian government agreed to Trump’s terms of accepting illegal immigrants, and Trump’s proposed tariffs were now on hold, the AP reported, citing a statement from White House Press Secretary Karoline Leavitt.  

The U.S. President had threatened to impose a 25% duty on all Colombian imports, which was set to increase to 50% within a week. Colombia’s biggest exports to the U.S. are oil, coffee, gold, and flowers. 

By Yoruk Bahceli and Stefano Rebaudo

LONDON (Reuters) – The European Central Bank meets on Thursday for the first time since Donald Trump returned to office, leaving U.S. tariff threats looming over the euro zone’s sluggish economy and potentially complicating the economic outlook.

Traders reckon further rate cuts are a done deal, so the question is whether the ECB drops any new hints on the path ahead.

“They expect President (Christine) Lagarde to say the door to further rate cuts is open,” said Bruno Cavalier, chief economist at Oddo.

Here are five key questions for markets:

1/ What will the ECB do on Thursday?

Most likely, cut the key deposit rate by another 25 basis points to 2.75%.

Markets fully price the move and the ECB removed language from its guidance in December that had pledged to keep rates restrictive.

“There has been no change to the outlook since December,” said Pictet Wealth Management’s head of macroeconomic research Frederik Ducrozet.

2/ How does Trump’s return change ECB thinking on tariff risks?

It doesn’t so far, economists reckon.

U.S. President Trump did not impose day-one tariffs and said the U.S. is not ready for universal ones. However, he put Canada, Mexico and China in the firing line and complained about the terms of trade with the European Union.

Trump told the World Economic Forum in Davos via video last week that other economies will face tariffs if they make their products anywhere but the U.S.

While some analysts take comfort in the initial approach being more measured than expected, that could change.

For the ECB, it’s all about how tariffs impact euro zone inflation, whether directly or through their impact on demand.

Lagarde said last week the bank is not “overly concerned” about Trump’s policies exporting inflation to Europe — comments ABN AMRO (AS:ABNd) economists took to signal the ECB would see tariffs as mainly being negative for growth.

3/ How far does the ECB need to cut rates?

Traders expect almost four rate cuts from the ECB this year and some policymakers have explicitly agreed, pointing to rates falling towards 2%.

That would put rates within estimates of the so-called neutral rate, which neither restricts nor accommodates growth.

But some hawks sound more cautious on the pace, with top hawk Isabel Schnabel recently warning that the bank needs to have a “deep think” on how far and quickly to cut.

Once rates reach 2.5% “they will have to think a bit harder to decide where to go”, said PIMCO portfolio manager Konstantin Veit.

But given a weak economy, the risk is skewed towards rates falling to 1.75%, he added.

Lagarde said last week the neutral level was anywhere between 1.75% and 2.25%.

4/ How worrying is the uptick in inflation for the ECB?

Not very, economists reckon.

Inflation rose to the highest since July at 2.4% in December, driven by higher energy prices and costs in services, where inflation isn’t budging from 4%.

Yet the rise is in line with the bank’s expectations and chief economist Philip Lane is confident wage growth is slowing and will quickly pull services inflation lower.

He has also warned keeping rates too high for too long could push inflation below target.

While the ECB only targets inflation, as it nears 2%, “it’s not as simple as just being a single mandate because after all, growth is important if you want to see where inflation is going to go,” said Danske Bank (CSE:DANSKE) chief analyst Piet Christiansen.

5/ What if the Fed stops cutting rates?

The ECB could slow its cuts, but it depends on the reason.

Traders’ Fed rate cut bets have swung in January given uncertainty around the U.S. inflation outlook.

BofA and BNP Paribas (OTC:BNPQY) expect the Fed to stay on hold this year.

“If they don’t cut because the economy is strong in the U.S., it’s also good news for Europe…. the ECB could actually be tempted to cut a little bit less,” Pictet’s Ducrozet said.

“If they don’t cut because of a stagflation kind of scenario, then it’s a different story and I don’t think it makes a big difference for the ECB,” he said, noting a fall in the euro to parity, from almost $1.05 at present, would not be a big focus.

By Andy Bruce

(Reuters) – A clear majority of British businesses look set to cut the size of pay awards for staff in response to coming tax hikes and they remain pessimistic about the outlook for the economy, two surveys showed on Monday.

Data provider Incomes Data Research said 69% of employers it canvassed were extremely or moderately likely to reduce pay awards to offset an increase in payroll taxes announced by finance minister Rachel Reeves in her first budget last October.

More than half of those respondents said they were “extremely likely” to slow their pay increases.

The survey sheds light on a key uncertainty facing the Bank of England ahead of its Feb. 6 interest rate announcement.

The BoE is trying to gauge whether employers will react to the tax hike by cutting jobs, wages or profits, or by raising prices.

Most investors and economists think the central bank is likely to cut interest rates by a quarter point next week but the picture for the rest of the year is less clear.

A separate survey published on Monday by the Confederation of British Industry showed companies were only slightly less pessimistic about the coming three months than they were in December.

The CBI’s growth indicator – which measures expectations among businesses across manufacturing and services, including retail – barely rose in January to -22 from a more than two-year low of -24 in December.

“After a grim lead-up to Christmas, the New Year hasn’t brought any sense of renewal, with businesses still expecting a significant fall in activity,” said Alpesh Paleja, interim chief economist at the CBI.

“Alongside plans to cut staff and raise prices further, this risks an increasingly awkward trade-off for policymakers.”

Reeves has said her tax increases are a one-off to put the public finances on a stable footing while raising funds for services and investment. She is expected to make a speech this week on her plans to speed up Britain’s slow economy.

One third of employers in the IDR survey said they were likely to make redundancies while 45% said they would absorb the impact of tax increases through reduced profits or other means.

IDR said 37% of employers planned to award pay rises of between 2.0% and 2.99% this year, while 43% predicted pay rises of between 3.0% and 3.99%. Only 14% expected 4% or more, offering some relief to the BoE which is worried about lingering inflation pressures in the economy.

IDR surveyed 168 employers covering 1.2 million workers in November and December. The CBI report covered 990 companies who were surveyed between Dec. 19 and Jan. 14.

WASHINGTON – President Donald Trump on Sunday issued an executive order establishing a review council for the Federal Emergency Management Agency, just days after he floated shuttering the agency whose resources are strained following multiple weather-related disasters and which is burdened by past failures in handling massive storms.

Last Friday, the Republican president floated the idea of shuttering FEMA during a trip to disaster areas in North Carolina and California, hit by a hurricane and massive wildfires.

    WHAT IS FEMA?    The federal agency’s mission is to help people before, during and after disasters, including hurricanes, tornadoes, earthquakes and floods. FEMA brings in emergency personnel, supplies and equipment to stricken areas.

Its reputation was battered by its poor handling of Hurricane Katrina in 2005, and the agency has struggled to recover. Trump criticized FEMA on the campaign trail and since taking office on Monday.     FEMA has a workforce of 20,000 people that can swell to more than 50,000 active members during major disasters, according to its website. It has 10 regional offices and the capacity to coordinate resources from across the federal government.    Officially created in 1979, it became part of the Department of Homeland Security in 2004.

TRUMP CRITICISM

Trump has accused FEMA of bungling emergency relief efforts in North Carolina and said he preferred that states be given federal money to handle disasters themselves. During a visit Friday, he said the agency should be fundamentally reformed or even scrapped.

“FEMA has turned out to be a disaster,” he said during a tour of a North Carolina neighborhood destroyed by September’s Hurricane Helene. “I think we recommend that FEMA go away.”

Trump also criticized California’s response to recent wildfires that devastated Los Angeles, but he pledged during a visit to work with California Governor Gavin Newsom and offered help to L.A. Mayor Karen Bass. 

     FEMA STAFFING    FEMA says it is currently supporting 108 major disasters and 10 emergency declarations. According to its daily operations briefing, 17% of its disaster-response workforce is available. 

After Trump said he wanted to overhaul or scrap FEMA, the agency’s acting head Cam Hamilton wrote to staff and assured them that “FEMA is a critical agency which performs an essential mission in support of our national security.” Hamilton is a former Navy SEAL Trump appointed to temporarily lead the agency after the Republican president took office last week.

         FEMA FUNDING

Funding for the agency has soared in recent years as extreme weather events boosted demand for its services. The agency received $29 billion from Congress in December to fund ongoing relief efforts.

A FEMA spokesperson told Reuters last week the agency has not received additional funding to reimburse states for ongoing recovery efforts after Hurricane Helene devastated North Carolina and the U.S. Southeast in late September.

There has been no presidential action or congressional appropriation under the current Trump administration to provide additional funds to FEMA for hurricane recovery efforts, and no credible reports of such funding.

         DISINFORMATION CAMPAIGN    While responding to real-life disasters, FEMA has also battled a slew of false rumors about how its funds have been used. Before his re-election, Trump and his Republican allies accused former President Joe Biden and Vice President Kamala Harris, the Democratic candidate for president, of using federal emergency money to help people who were in the country illegally. U.S. Representative Marjorie Taylor Greene went as far as to say government officials control the weather.

FEMA has been the target of so many falsehoods it has set up a rumor response page on its website to tamp them down.     One entry addresses the accusation that FEMA diverted funs to the border.

“This is false. No money is being diverted from disaster-response needs. FEMA’s disaster-response efforts and individual assistance is funded through the Disaster Relief Fund, which is a dedicated fund for disaster efforts. Disaster Relief Fund money has not been diverted to other, non-disaster related efforts.”         FEMA FAILURES    The agency has been criticized for emergency responses to hurricanes that fell short, including Hurricane Maria in Puerto Rico in 2017. Residents accused then-President Trump of being slow to dispatch aid after Maria and clumsy in his public remarks once it was clear the U.S. territory had been devastated.         In 2005, Hurricane Katrina battered New Orleans and flooded parts of the city as residents crowded into ill-prepared shelters.     Katrina devastated the Gulf of Mexico coast and caused more than 1,800 deaths. It also shattered the reputation of FEMA, which was sharply criticized for its response.

By Ankur Banerjee

SINGAPORE (Reuters) – The dollar firmed on Monday as traders pondered the ramifications of U.S. President Donald Trump’s tariff plans at the start of a week where the Federal Reserve is widely expected to hold interest rates steady.

The dollar clocked its weakest week since November 2023 last week on ebbing fears of tariffs from the Trump administration, but those worries resurfaced after he said he will impose sweeping measures on Colombia.

The retaliatory moves, including tariffs and sanctions, comes after the South American country turned away two U.S. military aircraft with migrants being deported as part of the new U.S. administration’s immigration crackdown.

That led to the Mexican peso, a barometer of tariff worries, sliding 0.8% to 20.426 per dollar in early trade. The Canadian dollar was a bit weaker at $1.43715.

The euro was 0.14% lower at $1.0474 ahead of the European Central Bank policy meeting this week where the central bank is expected to lower borrowing costs. Sterling last fetched $1.24615.

That left the dollar index, which measures the U.S. currency against six units, at 107.6, still close to the one-month low it touched last week.

Investor focus this week will be on the central banks and how policymakers are likely to react after Trump said he wants the Federal Reserve to cut interest rates.

The Fed is expected to keep rates unchanged when it concludes its two-day meeting on Wednesday, though investors will be watching for any clues that a rate cut could come in March if inflation continues to ease closer to the U.S. central bank’s 2% annual target.

Data on Friday showed that U.S. business activity slowed to a ninth-month low in January amid rising price pressures, while separately U.S. existing home sales increased to a 10-month high in December.

“Optimism has surged about Trump’s growth-friendly America First agenda, inflationary pressures have intensified to a four-month high, and businesses are taking on employees at the quickest pace since 2022,” said Kyle Chapman, FX markets analyst at Ballinger Group.

“That picture is suggestive of a reheating labour market, and strongly supportive of an extended pause at the Fed.”

In other currencies, the Australian and New Zealand dollars were slightly lower but remained closer to their one-month highs touched last week. The Australian markets are closed for the day.

The Japanese yen strengthened nearly 0.4% to 155.41 per dollar in early trading after the Bank of Japan raised interest rates on Friday to their highest since the 2008 global financial crisis and revised up its inflation forecasts.

BOJ Governor Kazuo Ueda said the central bank will keep raising interest rates as wage and price increases broaden but offered few clues on the timing and pace of future rate hikes.

Mark Dowding, chief investment officer at RBC BlueBay Asset Management, said the renewed attention back on the Japan story could provide a catalyst for the yen to appreciate in the weeks ahead.

“The Japanese currency remains extremely undervalued on most valuation models and, as interest rate differentials narrow, we think that this will help the yen perform better in 2025.”

BEIJING (Reuters) – Profits at China’s industrial firms fell 3.3% in 2024 from the previous year, official data showed on Monday.

The fall extended a 4.7% drop in the January-November period, and compares with a 2.3% decline for the entire 2023, according to National Bureau of Statistics data.

Industrial profit numbers cover firms with annual revenues of at least 20 million yuan ($2.74 million) from their main operations.

($1 = 7.3125 Chinese yuan)

By Jiaxing Li and Ankur Banerjee

HONG KONG/SINGAPORE (Reuters) -New shades of capitalism are emerging in China’s tuckered out stock market as companies, at Beijing’s behest, buy back their shares and pay record dividends to investors lying in wait for a so-far evasive rebound.

Investors say the record spree of share buybacks and dividend payouts mark a cultural shift in the market, turning the spotlight on shareholder returns akin to the ongoing corporate governance makeover in Japan.

The dividend yield on Chinese stocks has risen to around 3%, the highest since 2016, rewarding investors who have bravely stayed invested in a market that has been limp for years and faces more stress after Donald Trump’s return as U.S. president.

“China’s regulators and policymakers are trying to engineer this culture of shareholder return,” said Jason Lui, head of Asia-Pacific equities and derivatives strategy at BNP Paribas (OTC:BNPQY).

“If that can be successfully engineered, it will change the makeup of the capital market, and you’ve seen some early sign of that,” referring to increased shareholder returns.

The buybacks and dividends were introduced as part of proposals by Chinese authorities in September to lift stock prices and boost consumer sentiment.

The benchmark CSI 300 index has struggled in recent years, down more than 27% since 2021 against a 65% rise for the S&P 500. The market value of Chinese stocks has stagnated for a decade at around $11 trillion.

Lingering concerns over the indebted property sector, deflationary pressures, lack of big stimulus and geopolitical tensions have hurt sentiment, causing a foreign investment exodus. The threat of tariffs from Trump is another worry.

Even after Beijing showed willingness to boost the market in September, stock prices have lost momentum. The CSI300 index surged 40% in the two weeks after the first stimulus announcements but disappointment with the degree and pace of implementation has seen gains halve since then.

“The simple way to look at it, you should be paid enough of a dividend … for you to take the pain of the fact that the recovery might not happen in valuations,” said Bhaskar Laxminarayan, chief investment officer for Asia at Julius Baer (SIX:BAER).

“You’re being paid for that patience. If you’re not, then it’s not worth it.”

BIG DATA

Chinese firms distributed dividends totalling a record 2.4 trillion yuan ($329.7 billion) in 2024. Share buybacks too rose to a record high 147.6 billion yuan last year, data from regulators showed.

Wu Qing, head of the China Securities Regulatory Commission, said on Thursday that more than 310 companies are expected to pay out dividends totalling more than 340 billion yuan in December and January.

That is a 9-fold increase in the number of companies and a 7.6-fold rise in dividend amount versus the same period last year.

In a sign of how the market is maturing into one where shareholder return is becoming a differentiator, investors have been steadily pouring into dividend-themed exchange-traded funds (ETFs), with nearly $8 billion of inflow since 2020, compared with just $273 million in the previous five years, LSEG Lipper data showed.

The CSI Dividend Index – comprised of traditional energy, financial and material companies that yield high dividends – is up 20% in the past five years compared with a drop of about 8% for the blue-chip CSI300 index.

The CSI growth index sank 25% in the same period.

CULTURAL SHIFT

Policy measures, including a 300 billion yuan share buyback financing programme and guidelines requiring mainland companies to improve shareholder returns and valuations, have helped sharpen the focus on higher-yielding firms.

“China was never a dividend-yielding asset class as a whole, because it was always seen as a growth-oriented play. But now I think we’re in a nice sweet spot where you have both growth and yield,” said Nicholas Chui, China portfolio manager at Franklin Templeton.

Roughly two-thirds of the stocks in Chui’s portfolio are now yielding at least 2%, which is “not just a deliberate allocation on my part, but really the entire market has gone up in yield,” Chui said. “It’s a change in culture.”

Rising dividends also prevent income-seeking mainland investors from rushing into bonds, as they have done for months. The dividend yield is now well above the 1.7% they can earn on 10-year government bonds.

Shares of battery maker Contemporary Amperex Technology and e-commerce behemoth Tencent rose after the companies announced buybacks or dividend payouts.

Goldman Sachs estimates Chinese companies listed at home and abroad could return a total 3.5 trillion yuan to shareholders in 2025, a jump of over 17%.

“Companies don’t know where to put their cash, so they return it now to shareholders. This is a very big shift in mindset,” said Herald van der Linde (NYSE:LIN), head of equity strategy for Asia-Pacific at HSBC.

“I think 10 years ago, you wouldn’t have expected this.”

($1 = 7.2798 Chinese yuan)

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets. 

A big week for world markets kicks off in Asia on Monday with investors still navigating the blizzard of headlines around U.S. President Donald Trump’s likely economic agenda, while trying to gauge whether the “U.S. exceptionalism” narrative may be losing its luster.

The dollar fell 1.8% last week, its worst week since November 2023. If the greenback is consolidating, it shouldn’t really be a surprise – it hit a two-year high earlier this month and hedge fund net ‘long’ position was the biggest in nine years.

The dollar and U.S. stocks have been closely correlated, lifted by the huge wave of global capital inflows as investors bet heavily on the American AI, tech, growth and returns boom.

But if the dollar’s slide is a sign that the “U.S. exceptionalism” flame is starting to flicker, is Wall Street primed for a cooling off period too?

The S&P 500 hit a new high last week and the Nasdaq came close. Index levels are historically high, valuations are stretched, and big event risk looms this week in the shape of the Fed’s policy meeting and ‘Big Tech’ earnings.

Scrutiny on U.S. tech is intensifying as ripples from a Chinese AI startup called DeepSeek spread. DeepSeek recently launched a free, open-source AI model it claims is at least the equal of more established models like ChatGPT on many levels, but built at a fraction of the cost.

It’s early days but if this shines a critical light on the huge sums being spent on AI by U.S. tech firms, Wall Street could wobble.

The Asian calendar on Monday is dominated by China’s ‘official’ manufacturing and service sector purchasing managers index reports for January.

A Reuters poll suggests the manufacturing PMI will be unchanged from the previous month at 50.1. On the one hand, that would represent the fourth straight month of expansion in the sector. It would also indicate almost no growth at all for the second month in a row.

Data on Friday showed Chinese state-owned firms’ profits last year virtually evaporated, rising only 0.4% on the previous year. Wider industrial sector profits figures are due this week, perhaps as early as Monday, and are expected to confirm that 2024 was the worst year in decades.

Investors will give their second day verdict on Friday’s Bank of Japan’s rate hike. The initial take seemed to be that it was a ‘hawkish hike’, but Japanese money markets are still pricing in only another 25 basis points of tightening this year, unchanged from pre-Friday levels. This suggests BOJ guidance was actually pretty neutral, and Japanese stock futures are pointing to a strong rise on Monday.

Meanwhile, South Korean markets will be sensitive to the news that prosecutors on Sunday indicted impeached President Yoon Suk Yeol on charges of leading an insurrection with his short-lived imposition of martial law on Dec. 3.

Here are key developments that could provide more direction to markets on Friday:

– China ‘official’ PMIs (January)

– Japan leading indicator (November)

– Germany Ifo index (January)

Investing.com — U.S. President Donald Trump announced on Sunday that he is initiating a series of actions against Colombia after the Colombian government rejected two U.S. military flights carrying migrants.

Trump ordered his Administration to introduce “emergency 25% tariffs on all goods coming into the United States,” which will be raised to 50%” in one week.

According to Trump, these measures are necessary as the decision by Colombian President Gustavo Petro has put U.S. national security at risk. The retaliatory actions include tariffs, visa restrictions, and other measures.

Trump communicated his decision on his social media platform, Truth Social, stating that these actions were just the start.

“These measures are just the beginning. We will not allow the Colombian Government to violate its legal obligations with regard to the acceptance and return of the Criminals they forced into the United States!” Trump wrote on Truth Social.

He expressed his disapproval of the Colombian government’s breach of legal obligations concerning the acceptance and return of migrants they allegedly forced into the U.S.

Earlier on Sunday, President Petro stated that his government would not accept flights carrying deported migrants from the U.S. until the Trump administration establishes a protocol that ensures their dignified treatment.

Petro’s announcement was made in two posts, one of which featured a news video showing migrants reportedly deported to Brazil walking on a tarmac with restraints on their hands and feet.