Global technology stocks were under pressure on Wednesday as concerns about Omicron’s coronavirus variants faded and bets on interest rate hikes reduced the appeal of groups that thrived throughout the pandemic.
Hong Kong’s Hang Seng Index fell 1.6%, and its technology sector fell 4.6%. This was the biggest decline in technology stocks traded in the city since July.
Hong Kong’s move echoed Wall Street trading on Tuesday, and the futures market hinted that US technology stocks might fall for the second day in a row.
The contract tracking the Nasdaq 100 index fell slightly by 0.4% after the Wall Street technology-focused stock index fell 1.3% in the previous trading day.
Shares of electric car maker Tesla fell 1% in premarket trading, while Microsoft fell slightly by 0.3% and Apple was flat.
In Europe, the Stoxx 600 stock index rose 0.1%, while its technology sub-index fell about 0.1%. ASML, a Dutch semiconductor equipment manufacturer and Europe’s largest technology company by market capitalization, fell 0.2% after dropping nearly 3% on Tuesday.
After tech stocks fell out of favor Early data It is recommended that Omicron is less likely to cause hospitalization than previous strains, which can lead to widespread blockade.
Emmanuel Cau, Head of Equity Strategy at Barclays Europe, said: “The Omicron variant seems to be quite mild, and the surge in cases has not led to higher deaths, which increases people’s hope that the pandemic is about to end.”
This optimism has boosted the stock prices of so-called cyclical companies this week whose wealth is closely related to economic trends, such as banks and energy producers.
Measured by market capitalization growth in U.S. dollars since January 2020, the components of Wall Street’s $1.13 billion FANG+ index, such as Apple and Amazon, have been the biggest publicly traded winners of the pandemic. according to A study by the Financial Times.
According to Bloomberg data based on Tuesday’s closing price, FANG+ Group accounts for 27% of the S&P 500 Index.
Paul Jackson, head of asset allocation at Invesco, said: “Even if the global stock market returns are reasonable this year, the U.S. market will be struggling.”
He added that because large technology companies dominate the index, Standard & Poor’s has “become a market that has performed well during the economic downturn.”
Although the prospects of technology groups have been boosted by lockdowns and other social restrictions, ultra-low bond yields have also reduced their valuations, which reduces the opportunity cost of owning growth companies that pay little or no dividends.
Traders also withdrew from U.S. Treasury bonds this week, a safe-haven asset favored in times of economic uncertainty, lowering the price of debt instruments and pushing up their yields.
Officials of the U.S. Federal Reserve are gradually reducing their monetary stimulus measures during the pandemic. Expected According to the forecast announced at the end of last year, the central bank will raise interest rates three times this year.
The yield on the benchmark 10-year US Treasury note fell slightly by 0.02 percentage points to 1.646% on Wednesday, but it has climbed from approximately 1.5% on December 31.
In other markets, the UK’s FTSE 100 Index rose 0.2% after rising 1.6% on Tuesday, thanks to its highly concentrated banking, energy and resources businesses. Boosted by consumer and industrial stocks, the German Dax Index rose 0.6%.
Brent crude oil stabilized at US$80 per barrel. Due to Omicron’s concerns, oil prices fell to a low of US$69.28 at the end of December.