ALU, APX, CDA: How these ASX tech stocks are faring as bond yields jump

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ALU, APX, CDA: How these ASX tech stocks are faring as bond yields jump

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ALU, APX, CDA: How these ASX tech stocks are faring as bond yields jump
Image source: ©Miflippo | Megapixl.com

Highlights

  • US bond yields surged to multi-year highs overnight.

  • The yields rose following remarks from US Federal Reserve Governor Lael Brainard, hinting at aggressive monetary policy tightening.

  • As a result, tech stocks are under pressure today.

US Treasury yields rose to their highest level since May 2019 overnight, following remarks from US Federal Reserve Governor Lael Brainard, indicating the possibility of aggressive monetary policy tightening by the central bank to curb inflation.

“Inflation is much too high and is subject to upside risks,” said Brainard. “The Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted,” she added.

The comments came as bond market throws signals of a likely recession. In the past, yield curve inversions have happened ahead of recessions. An inverted yield curve is a phenomenon when short-term debt instruments have higher yields than long-term instruments of the same credit risk profile.

 

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In such a scenario, tech stocks face more pressure than others as higher bond yields make their often-far-off future earnings look less attractive. As a result, investors look for so-called value stocks such as banks, whose prospects are more closely linked with the economy, inflation, and interest rates.

Here we discuss the impact of a spike in bond yields on share prices of a few major ASX-listed tech stocks:

Altium Ltd (ASX:ALU)

Altium Limited is a publicly traded software company that provides PC-based electronics design software for engineers who design printed circuit boards.

By 10:05 AM (AEST), the stock was trading at AU$34.72, down 1.92%.

Appen Ltd (ASX:APX)

Appen provides or improves data used for the development of machine learning and artificial intelligence products.

By 10:05 AM (AEST), the stock was trading at AU$6.88, down 1.99%.

 

Codan Ltd (ASX:CDA)

Codan is a manufacturer and supplier of communications, metal detection, and mining technology.

By 10:05 AM (AEST), the stock was trading at AU$7.22, down 1.63%.

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