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Highlights
- In January, US tech stocks tumbled due to the expectation of rate hike by the Fed. In February, things improved, and tech stocks showed a recovery.
- Things took an ugly turn on Thursday when Meta plunged 26%, the biggest single-day fall in market value for a US company, after a dismal earnings report.
- Many of the UK funds hold stakes in the US tech stocks, and thus these funds are bound to be impacted their performance.
After a torrid January, many of the London-listed funds have gained due to the bounce back of US tech stocks earlier this week, which were tumbling due to the expectation of rate hike by the Fed. But things changed on Thursday when Chief Executive Officer Mark Zuckerberg-controlled Meta Platforms plunged 26% after a dismal earnings report.
The Thursday slide saw Meta’s market cap go down by US$200 billion and around US$29 billion from Zuckerberg's net worth, which later spilled over to the broader technology sector globally. The social media giant blamed Apple Inc's privacy rules and increased competition.
Major US stock indexes tumbled on Thursday following the news. The tech-heavy Nasdaq Composite Index slumped 538.73 points, or 3.7%, which was its largest one-day decline since September 2020, after a great four-day rally.
Initially, the market was affected by the news of potential US interest rate hike. That had impacted markets across the world. The Nasdaq fell more than 9% in January, its worst monthly drop since the pandemic market crash in March 2020.
Even the International Monetary Fund (IMF) forewarned that the vulnerable countries would face the risk of plunging financial markets due to the US rate hike.
Many of the UK funds hold stakes in the US tech stocks, and thus these funds are bound to be impacted their performance.
Let’s take a look at 3 such stocks that initially gained because of the rebounding of US tech stocks.
RELATED READ: US interest rate rise: Which stocks in UK can get affected?
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Scottish Mortgage Investment Trust PLC (LON: SMT)
Scottish Mortgage Investment Trust makes investments in strong businesses across the globe with an aim of generating above-average returns. Its major shareholdings include EV groups Tesla and Nio along with computer graphics card maker Nvidia. The market cap of the FTSE100-listed trust stands at £15,964.88 million, and it has provided a return of -19.84% to its shareholders over the past year as of 3 February 2022. Scottish Mortgage Investment Trust plc’s shares closed trading at GBX 1,088.50 on 2 February 2022. On Thursday, it closed trading at GBX 1,056.50, down by 4.43%, on 3 February.
Allianz Technology Trust PLC (LON:ATT)
Allianz Technology Trust provides the investors with access to the rapidly evolving world of technology. The fund has huge investments in tech giants like Google parent Alphabet, Microsoft, and Apple. The market cap of the FTSE250-listed trust stands at £1,237.11 million, and it has provided a return of -9.06% to its shareholders over the past year as of 3 February 2022. Allianz Technology Trust plc’s shares closed trading at GBX 287.00on 2 February 2022. On Thursday, it closed trading at GBX 281.00, down by 3.93%, on 3 February.
RELATED READ: US stocks edge lower as tech stock slips
Baillie Gifford US Growth Trust PLC (LON:USA)
UK-based investment firm, Baillie Gifford US Growth Trust, focuses on making investments in US-based companies which would help generate maximum returns. It also has stakes in Netflix, Amazon, and the Canadian shopping site Shopify. The market cap of the FTSE250-listed trust stands at £693.10 million, and it has provided a return of -37.71% to its shareholders over the past year as of 3 February 2022 Baillie Gifford US Growth Trust plc’s shares closed trading at GBX 225.00 on 3 February 2022.
