Shares of technology are falling as investors look at Omicron’s disruptions

Global stocks of technology were under pressure on Wednesday as declining concerns about a variant of the Omicron virus and bets on rising interest rates reduced the attractiveness of groups that thrived during the pandemic.

Hong Kong’s Hang Seng index fell 1.6 percent and its technology subsector lost 4.6 percent. That marked the worst decline for technology stocks traded in the city since July.

The move in Hong Kong resonated in trading on Wall Street on Tuesday, with futures markets suggesting U.S. technology stocks could fall another day.

Contracts tracking the Nasdaq 100 index fell 0.4 percent after a technology-focused Wall Street stock index fell 1.3 percent in the previous session.

Shares of electric car maker Tesla fell 1 percent in pre-market trading, while Microsoft fell 0.3 percent and Apple was left worthless.

In Europe, the Stoxx 600 capital index rose 0.1 percent, while its technical sub-index fell about 0.1 percent lower. ASML, the Dutch semiconductor equipment maker and Europe’s largest technology company by market capitalization, fell 0.2 percent after falling nearly 3 percent on Tuesday.

Technology stocks have since fallen out of favor early data suggested that Omicron was less likely than previous strains to lead to hospitalizations and therefore widespread closure.

“The Omicron variant looks rather mild, with an increase in the number of cases that do not result in more deaths, which raises hopes that the end of the pandemic is in sight,” said Emmanuel Cau, head of European capital strategy at Barclays.

This optimism this week boosted the shares of so-called cyclical companies – companies whose wealth is closely linked to economic trends – such as banks and energy producers.

The $ 11.3 billion FANG + components of the Wall Street index, such as Apple and Amazon, were the biggest winners of the publicly traded pandemic, as measured by the growth of market capitalization in dollars since January 2020. according to Financial Times study.

The FANG + group makes up 27 percent of the S&P 500, according to Bloomberg data based on Tuesday’s closing prices.

“Even if global stocks make a reasonable return this year, the U.S. market will struggle,” said Paul Jackson, head of asset allocation at Invesco.

Due to the dominance of large technology companies in the index, he added, S&P has “become a market that performs better during economic downturns”.

While the prospects of technology groups are amplified by closures and other societal constraints, their assessment is flattered by ultra-low bond yields that reduce the opportunity cost of owning developing companies that pay minimal or no dividends.

Traders also withdrew from US government bonds this week, asylum assets that were a favorite in times of economic uncertainty, lowering the price of debt instruments and increasing their yields.

U.S. Federal Reserve officials, who are lifting their monetary stimulus from the pandemic era, to expect the central bank will raise interest rates three times this year, according to projections released late last year.

Yields on the reference 10-year U.S. Treasury, which is reversed from the price of debt, fell 0.02 percentage points lower to 1.466 percent on Wednesday, but rose from about 1.5 percent on Dec. 31.

In other markets, the British FTSE 100 rose 0.2 percent after gaining 1.6 percent on Tuesday, thanks to a high concentration of business in banking, energy and resources. Germany’s Dax strengthened 0.6 percent, boosted by consumer and industrial stocks.

Brent crude was stable at $ 80 a barrel. The reference value for oil fell to only $ 69.28 at the end of December, under pressure from Omicron.

Source link

Be the first to comment

Leave a Reply

Your email address will not be published.