This is part of our monthly pension update series. Catch up on last month’s summary here: What happened to pensions in December 2024?
China recently launched DeepSeek, a powerful Artificial Intelligence (AI) model. It’s sparked a lot of discussion about the global technology landscape, with the growing competition between the United States and China coming into sharp focus.
DeepSeek’s advanced abilities have raised questions about the potential for China to challenge the US’s long-standing dominance in the technology sector. This shift would have important implications for international relations, economic competition, and the future of technological innovation.
Keep reading to find out how global stock markets performed in January 2025 and how advancements in AI could impact pensions.
What happened to stock markets?
In the UK, the FTSE 250 Index rose by almost 2% in January.
Source: Google Market Data
In Europe (excluding the UK), the EuroStoxx 50 Index rose by 8% in January.
Source: Google Market Data
In North America, the S&P 500 Index rose by almost 3% in January.
Source: Google Market Data
In Japan, the Nikkei 225 Index fell by almost -1% in January.
Source: Google Market Data
In the Asia Pacific (excluding Japan), the Hang Seng Index rose by almost 1% in January.
Source: Google Market Data
What does DeepSeek have to do with UK pensions?
Innovations like DeepSeek could drive advancements in technology and productivity across the world. As companies adopt more efficient AI tools, they may become more profitable, which could have a positive impact on global stock market performance.
Pension funds often contain a mix of asset types, from bonds to company shares (also known as equities). You probably own a tiny percentage of many of the world’s largest and most successful companies. This includes the big players in the technology sector - known as the ‘Magnificent Seven‘. These company shares are known as holdings within your pension plan. So this boost could lead to better returns for pension savers.
The competitive advantage gained by Chinese firms could also challenge the rest of the world to innovate and improve their own technological capabilities. It could lead to improved products and services, which would positively affect the global economy. This would be good news for pension savers, as a strong global economy often means you may see gains.
But, there are also some risks to advancements in AI. If the US continues to force restrictions on China, it could create a ripple effect, and impact global supply chains and market stability. This uncertainty could lead to volatility in financial markets, which can affect the value of investments. Market volatility is a normal part of investing but can feel scary. Historically, stock markets balance out over time, although this isn’t guaranteed. Regular contributions and saving as soon as possible gives you more time for things to balance out and offer better returns.
The developments around DeepSeek may seem far from our daily concerns. However, the way markets are interwoven across the world means that staying informed is essential. As most UK pensions link to other countries’ economies through investment, it means that anything impacting those markets, such as developing technologies, can affect the value of the holdings in your pension fund.
Appreciating this link and making sure you’re up to date is key to help you better understand your pension balance.
This is part of our monthly pension update series. Check out the next month’s summary here: What happened to pensions in February 2025?
Have a question? Get in touch!
Do you want to know more about your pension plan with PensionBee? You can check out our Plans page to learn how your money is invested in different assets and locations, or log in to your BeeHive to see your specific plan. You can always send comments and questions to our team via engagement@pensionbee.com.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
