Morning bid: US exceptionalism has a flipside

A look at the day ahead in European and global markets from Tom Westbrook

The exceptionalism that drove Wall Street to record highs on the back of America's peerless technology firms suddenly has it looking vulnerable and maybe not so peerless after all.

Chinese startup DeepSeek's shoestring AI model wiped nearly $600 billion from the value of chipmaking market darling Nvidia on Monday, as the assumptions behind a two-year rally in everything to do with AI suddenly looked fragile.

Never has a single company lost so much value in a day.

DeepSeek says it was able to match U.S. AI performance with much less data and computing power. Cue a vicious unwind of all the positions in data centres, cable-makers, electricity sellers and all sorts of AI-ancillary businesses.

For once, the absence of many such businesses or any colossal technology names from Europe's markets has a silver lining, allowing the broad markets in London and the continent to escape the worst of the thrashing.

German software giant SAP, which held up fairly well on Monday, beat earnings forecasts and expects accelerating cloud growth, it said early on Tuesday, though traders may scrutinise how much of that growth it expects AI to deliver.

Chip manufacturing equipment maker ASML, which fell 7% on Monday, may come in for further pressure as selling extended in Tokyo on Tuesday.

French consumer confidence and full-year results at LVMH and Christian Dior are also on the calendar.

In the Asia day, Nasdaq futures steadied as did shares in Nvidia in after-hours trade, as well as equity futures for the FTSE and Europe.

Markets in China, Taiwan and South Korea were shut for a holiday, while Hong Kong trade was shortened on the eve of Lunar New Year, leaving the attention concentrated on Japan.

Shares in Nvidia supplier Advantest fell 11%, leaving the two-day drop near 20%. Furukawa Electric, which makes optic fibres for data centres and tripled in value last year, has notched a similar drop this week.

Boeing, General Motors and Starbucks report in the U.S. day. Later in the week, fragile markets face earnings at Meta, Microsoft and Tesla - all reporting on Wednesday.

Analysts say DeepSeek's pricing blows away anything from the competition and may have some of these companies dialling down their AI spending plans.

Policy meetings are also due later in the week in the U.S. and Europe. Monday's market rout had traders pricing in about an extra 9 basis points of Federal Reserve easing.

A rate cut in Europe on Thursday is all but priced in.

Key developments that could influence markets on Tuesday:

- Earnings: SAP, Dior, LVMH, Boeing, Starbucks, Lockheed Martin, General Motors

- Economics: French consumer confidence, ECB bank lending survey

(Editing by Jamie Freed)