Closing Bell: ASX flat as Chinese AI DeepSeek spooks markets

The ASX closed flat as Chinese AI disruptor DeepSeek spooked Nasdaq, tanked Nvidia and infected local tech stocks.

All the focus is on the tech arms race between China and the US today. Pic: Getty Images

• ASX closes flat as Chinese AI disruptor DeepSeek spooks Nasdaq and local tech stocks

• Nuix, NextDC and DigiCo face sharp losses as concerns grow China is closing the AI gap

• Red Hawk Mining up 44% today after Fortescue cash takeover bid that could net $1.20 a share

Aussie shares closed flat in afternoon trade with the S&P/ASX 200 benchmark finishing up by only 0.04% in the first day back after a long weekend, but all the talk was on tech as concerns over China’s new AI model DeepSeek triggered a global sell-off.

On Wall Street the Nasdaq dropped 3%, and Nvidia saw its market cap shrink by hundreds of billions after a 17% plunge.

Chinese AI competitor DeepSeek has launched a new model that experts warn could disrupt the market.

Offering similar capabilities to OpenAI at a fraction of the cost, it raises concerns that China is closing the AI gap with the US. DeepSeek’s model was trained for just US$5.6 million, a small fraction of what OpenAI spent on GPT.

#DeepSeek was trending on Twitter today where OpenAI chief executive Sam Altman seemed to welcome the competition.

deepseek's r1 is an impressive model, particularly around what they're able to deliver for the price.

we will obviously deliver much better models and also it's legit invigorating to have a new competitor! we will pull up some releases.

— Sam Altman (@sama) January 28, 2025

"By developing cutting-edge AI models with less advanced and more cost-efficient hardware, DeepSeek challenges the heavy investments US tech companies are pouring into high-cost AI infrastructure."

Chanana said its lower development costs raise critical questions about whether the traditional capital-intensive approaches by US tech companies were sustainable in the long run.

Source: Market Index

Source: Market Index

Australian tech stocks were hit by the DeepSeek inspired sell-off, with data centre operator NextDC (ASX:NXT) falling ~7.8%.

Nuix (ASX:NXL), which provides specialised software for analysing large data sets, tumbled 16.3%, while real estate investment trust with a focus on data centres DigiCo Infrastructure REIT (ASX:DGT) also dropped more than 10%.

ASX SMALL CAP LEADERS

Today’s best performing small cap stocks:

Code	Description	Last	%	Volume	MktCap
YAR	Yari Minerals Ltd	0.005	67%	12,798,937	$1,447,073
1TT	Thrive Tribe Tech	0.003	50%	518,202	$4,063,446
AYM	Australia United Mining	0.003	50%	357,868	$3,685,155
CZN	Corazon Ltd	0.003	50%	170,000	$2,369,145
EVR	Ev Resources Ltd	0.003	50%	28,994,934	$3,625,007
RHK	Red Hawk Mining Ltd	1.18	44%	770,517	$163,845,413
CTO	Citigold Corp Ltd	0.004	33%	3,011,021	$9,000,000
DTR	Dateline Resources	0.004	33%	1,023,000	$7,548,781
EAT	Entertainment	0.004	33%	205,912	$3,926,358
PKO	Peako Limited	0.004	33%	125,000	$3,285,425
PRX	Prodigy Gold NL	0.002	33%	16,627,348	$4,762,583
TTI	Traffic Technologies	0.004	33%	129,490	$3,461,200
VPR	Volt Group	0.002	33%	126,375	$16,074,312
CNJ	Conico Ltd	0.012	33%	1,140,660	$2,137,386
DSE	Dropsuite Ltd	5.7	30%	3,480,669	$309,141,329
AQD	Ausquest Limited	0.044	29%	61,670,402	$38,417,780
AGD	Austral Gold	0.053	26%	246,728	$25,717,077
XPN	Xpon Technologies	0.015	25%	4,046,302	$4,349,298
TMX	Terrain Minerals	0.005	25%	1,548,728	$7,242,782
DEM	De.Mem Ltd	0.135	23%	495,359	$32,207,271
RCL	Readcloud	0.0915	22%	335,237	$11,072,481
ASO	Aston Minerals Ltd	0.012	20%	25,583,987	$12,950,643
MQR	Marquee Resource Ltd	0.012	20%	48,804	$4,854,805
OSL	Oncosil Medical	0.006	20%	3,247,938	$23,032,901
TEG	Triangle Energy Ltd	0.006	20%	42,648	$10,446,170

Red Hawk Mining (ASX:RHK) is up 44% after Fortescue (ASX:FMG) made a cash takeover bid at $1.05 per share, a 28% premium on its last closing price.

If Fortescue secures 75% of Red Hawk shares in the first seven days, the offer increases to $1.20 per share, a 46% premium. The Red Hawk board has recommended shareholders accept the offer, deemed fair and reasonable by independent expert BDO.

In other acquisition news, tech stock Dropsuite (ASX:DSE) has agreed to an all-cash takeover offer from NinjaOne for $5.90 per share, valuing the company at around $420 million.

The offer represents a 34% premium to its last closing price with the Dropsuite board fully backing the deal.

ASX SMALL CAP LAGGARDS

Today’s worst performing small cap stocks:

Code	Name	Price	% Change	Volume	Market Cap
NIM	Nimy Resources	0.09	-38%	2,766,334	$27,001,721
AOK	Australian Oil	0.002	-33%	500,000	$3,005,349
BP8	BPH Global Ltd	0.002	-33%	20,000	$1,449,924
VML	Vital Metals Limited	0.002	-33%	59,136	$17,685,201
BDM	Burgundy D Mines Ltd	0.048	-31%	8,800,611	$99,493,259
FFF	Forbidden Foods	0.007	-30%	6,843,886	$5,722,235
88E	88 Energy Ltd	0.0015	-25%	1,523,651	$57,867,624
IRX	Inhalerx Limited	0.02	-20%	324,747	$5,336,206
ENV	Enova Mining Limited	0.004	-20%	4,090,747	$4,924,647
GGE	Grand Gulf Energy	0.002	-20%	1,073,333	$6,125,968
TMK	TMK Energy Limited	0.002	-20%	2,563,712	$23,313,913
BMN	Bannerman Energy Ltd	2.55	-20%	2,376,653	$568,534,697
NXL	Nuix Limited	4.345	-20%	3,769,589	$1,785,959,987
LOT	Lotus Resources Ltd	0.2075	-19%	27,289,513	$602,476,245
ASQ	Australian Silica	0.022	-19%	80,000	$7,610,230
1AE	Aurora Energy Metals	0.05	-18%	480,091	$10,922,888
AI1	Adisyn Ltd	0.1	-17%	7,680,629	$74,074,493
BRN	Brainchip Ltd	0.325	-17%	37,288,733	$769,262,511
EL8	Elevate Uranium Ltd	0.25	-17%	2,108,415	$115,684,744
ADG	Adelong Gold Limited	0.005	-17%	62,119	$6,707,934
MTB	Mount Burgess Mining	0.005	-17%	50,000	$2,037,225
RLC	Reedy Lagoon Corp.	0.0025	-17%	274,000	$2,330,120
DYL	Deep Yellow Limited	1.2175	-16%	9,057,379	$1,414,967,258
CMD	Cassius Mining Ltd	0.016	-16%	536,378	$12,198,845
MCO	Myeco Group Ltd	0.016	-16%	170,773	$11,335,591

In case you missed it

New South Wales explorer Australian Mines (ASX:AUZ) is preparing to drill at its high-grade scandium Flemington project, which currently holds a 6.3Mt resource at 466ppm scandium.

Australian Mines said it would drill out the project for roughly 50 aircore holes with the majority of the campaign focused on infill drilling and to test potential lateral extensions to the resource.

The remainder of the drilling will be for exploration and testing the Owendale Intrusive Complex which, outside of the company's tenements, hosts the Rio Tinto (ASX:RIO) Burra scandium project 4km to the east.

With the countdown on to FDA approval for its WiSE CRT (cardiac resynchronisation therapy) system  EBR Systems (ASX:EBR) has  signed an 11-year commercial lease agreement for a 4,751 sqm facility in a bid to boost its manufacturing scale and capabilities.

EBR expects to complete its move into the new Santa Clara facility during H1 2026.  The company is expecting its to gain FDA approval for WiSE – touted as the only wireless cardiac pacing device for heart failure – on or before April 13, 2025, with commercial launch in H2 CY25.

At Stockhead, we tell it like it is. While Australian Mines and EBR Systems are Stockhead advertisers, they did not sponsor this article.

Disclosure: The author held shares in DigiCo at the time of writing this article.

Originally published as Closing Bell: ASX flat as Chinese AI DeepSeek spooks markets