Asian equities were mixed in another holiday-thinned trading day Thursday, with investors digesting broadly positive tech earnings that came days after the upheaval caused by China’s DeepSeek explosion onto the global AI scene.

With most markets closed for the Lunar New Year break, there was little major reaction to the Federal Reserve’s widely expected pause in interest rate cuts and indications that no more were in the pipeline.

The tepid performance in Asia followed a retreat among Wall Street main indexes but the volatility that greeted the start of the week has gone for now, though worries about the valuations of some top tech firms continue to weigh on sentiment.

Trading floors were jolted Monday after DeepSeek unveiled a chatbot that apparently matched the capacity of US artificial intelligence pacesetters for a fraction of the investments made by American companies.

Firms that have most benefited from a long-running scramble for all things AI took a heavy hit, with chip titan Nvidia the standout victim — losing almost $600 billion in market capitalisation, while other major firms and chipmakers also felt the pain.

While some of the losses have since been recovered and leading lights in the industry talk up the benefits of the competition, there are fears about the hundreds of billions sunk into projects aimed at getting a lead in AI.

“The AI sector is still feeling the heat with bears circling, ready to pounce on any signs of weakness,” said Stephen Innes at SPI Asset Management.

“The scepticism around tech valuations, already a popular spiel before Monday’s wipeout, has only intensified.

“The argument that tech stocks are perilously overpriced now resonates even more on trading floors, fuelling a bearish outlook and gaining followers by the minute.”

The DeepSeek news provided an extra facet to the current earnings season, with focus on how US tech giants will react.

Wednesday saw a broadly upbeat readout, with Facebook-parent Meta, IBM and Tesla posting healthy earnings, though Microsoft disappointed. Apple is due to report Thursday.

After the negative lead from New York, Asian markets diverged.

Tokyo and Sydney rose while Wellington, Manila and Jakarta slipped.

The Fed’s decision to stand pat on rates made little difference, though analysts noted its statement said inflation “remains somewhat elevated”, removing a reference in earlier statements to inflation making progress towards officials’ long-term target of two percent.

After the announcement, boss Jerome Powell said: “With our policy stance significantly less restrictive than it had been, and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance.”

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