How events overseas affect markets

Investing can be affected by many different things. One thing in particular that can affect the market is things that happen overseas, since all of the markets are connected one way or another. Different companies are always competing, and if one is doing really well in one place it may affect other companies trying to do the same in different places.

An example of this is the event that took place on the 27th of January, 2025, when US AI stocks like Nvidia (NVDA) came crashing down due to good news being released about the Chinese AI sector. This news release affected AI stocks in the United States like Nvidia, which lost nearly 600 billion dollars in market value due to the Chinese AI company DeepSeek. This 1-year startup presented a Chat-GPT like model that was developed for a lot less money. They spent around 6 million dollars compared to the estimate of 400-500 million dollars that Chatgpt needs in order to make advancements and keep their bot running. This sent shockwaves through the stock market, mainly the tech sector. This is just one of the many reasons why everything affects everything and how one company in one place can affect other companies across the world. This is why the stock market is so important and also so vulnerable because it can go up so fast and also drop so fast.