Tech stocks set to crash to a 11-month low; what’s fanning ASX tech rout?

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Summary

  • Afterpay (ASX:APT) and Zip (ASX:Z1P) plunged as much as 14 per cent in the intraday trade.
  • The ASX 200 Information Technology fell as much as 6 per cent, marking its biggest intraday percentage loss since March 2020.
  • The steep fall has wiped out more than A$5 billion in Afterpay stock’s value.

The Australian technology stocks traded under pressure on Friday after the rise in bond yields hit the US peers. Leading buy now pay later (BNPL) players such as Afterpay (ASX:APT) and Zip (ASX:Z1P) declined as much as 14 per cent in the intraday trade after the broader market dipped over 2 per cent. 

The ASX 200 Information Technology fell 6 per cent, marking its biggest intraday percentage loss since March 2020. As of the last closing on Thursday, the Australian tech sub-index had lost 3.7 per cent so far this year. 

Image Source: © Irochka | Megapixl.com

Afterpay leads the losers

By 12:27 PM (AEDT), Afterpay shares were trading at A$122.71, down 11.65 points, or 8.67 per cent against the previous closing, eyeing their worst day in eleven months. The steep fall has wiped out more than A$5 billion in value in their sharpest intraday percentage dip since 23 March 2020.

On Thursday, Afterpay reported a significantly wider statutory loss of A$79.2 million due to a put option on its UK business rising in value. According to Refinitiv, global brokerage firm Morgan Stanley cut Afterpay’s recently raised price target to A$159 from A$170.1.

Similarly, another major BNPL firm Zip was down over 5 per cent, while WiseTech Global(ASX:WTC), a logistic software provider, lost 10 per cent. Also, accounting software maker Xero (ASX:XRO) shed 3.5 per cent; data centre operator NEXTDC (ASX:NXT) dipped 4.4 per cent; and machine learning data firm Appen (ASX:APX) plunged 5.7 per cent.

What’s weighing on the tech stocks?

The US stocks slipped from the record highs overnight amid concerns over the slower pace of economic recovery and inflation. That surge put the 10-year interest rate above the 1.48 per cent S&P 500 dividend-yield.

Image Source: © Cmmeraydave | Megapixl.com

Investors were also cautious over heightened valuations and prompt profit-taking, resulting in a heavy sell-off in the local tech stocks. The tech-heavy NASDAQ Composite Index settled down 3.52 per cent to 13119.43.

READ MORE: How did 1H21 turn out for healthcare technology stocks HMD and ADR?

Meanwhile, the ASX 200 was trading down 143.40 points or 2.10 per cent to 6690.60, despite crossing above its 20-day moving average. The index has lost 1.52 per cent for the last five days, but sits 3.57 per cent below its 52-week high.

READ MORE: High on robust earnings, Kogan (KGN), Harvey (HVN) pay high dividends 

 

 


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