ASX 200 rises, Afterpay, Zip share prices fall as tech rout continues

Tech stocks face brunt of investor worries

It’s been a calamitous five sessions for tech stocks. In the US, the tech-heavy Nasdaq 100 index has fallen over 1,000 points or 7.54%, finishing out last Friday’s session at 12,299.08 points.

From the high it recorded in early February, it is down more than 10%.

As a result of this sell-off, hundreds of billions in market value has been erased. Interestingly, while the likes of Tesla has seen its share price fall 21% over the last five sessions, some high-profile US big-cap tech stocks have proven resilient. Amazon has fallen 6.09%, Facebook 3.71%, and Alphabet (Google) just 2.78%.

This all comes as the market grows increasingly concerned about the prospect of rising inflation and interest rates. Indeed, with stocks proving increasingly volatile in the short-term, Peter Boockvar, from Bleakley Advisory Group, recently argued that ‘we are again seeing a market that is taking control of monetary policy from the Fed.’

‘The Fed has put themselves in a tough situation and the only way out is if inflation does not rise further and does not get to their 2% target,’ Mr Bleakley added.

This comes as US Fed Chair Jerome Powell recently told attendees at an online Wall Street Journal event last week:

‘If we do see what we believe is likely a transitory increase in inflation, where longer term inflation expectations are broadly stable at levels consistent with our framework and goals, I expect that we will be patient.’

Australian tech under pressure, Afterpay and Zip share prices lower

Against the backdrop of these investor concerns, Australian stocks have also proven volatile in the last week, with the ASX 200 benchmark trading with pronounced volatility, both up and down.

Tech stocks, such as Afterpay and Xero, have faced the brunt of this bearish action.

On Tuesday, 9 March, while the broader market rallied, with the ASX 200 and All Ords both up 0.99% and 0.84%, respectively, the S&P500/ASX 200 All Technology Index, which is made up of ASX-listed technology oriented companies, was down 2.77% by 12:38PM.

Afterpay – the largest weight of the All Tech Index – has come under particularly heavy selling pressure in recent times, with the stock down 17% in the last five sessions. From its 52-week high recorded in early February, the stock is down a more pronounced 37%.

BNPL rival Zip has faced comparable declines, with the stock 17% lower over the last five sessions. Zip is now some 41% off the high it recorded in March, slightly outpacing the losses experienced by Afterpay. Even so, at the time of writing Zip remains up ~50% YTD.

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