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Summary
- Nasdaq, the tech heavy index of the US market has suffered a severe beating in the last two sessions
- Technology companies have been leading the market higher after the sharp dip during the lockdown
- Apple Inc which had reached a $2 trillion milestone in terms of market capitalisation recently, lost substantial value in the tech selloff
- The technology stocks in the UK mostly ended in red taking cues from the US markets
September 3rd and 4th marked rough days on the Wallstreet as the highflyer US technology stocks tumbled. Apple, Tesla, Amazon, Microsoft were some prominent names which lost a fair amount of market capitalisation.
On 3 September 2020, Dow Jones dropped 2.8 per cent; the S&P 500 tanked by about 3.5 per cent; and the Nasdaq, the tech heavy index dropped almost 5 per cent. The next day losses enlarged, with Dow declining by 0.56 per cent, S&P losing 0.81 per cent and the Nasdaq Composite retreated by 1.27 per cent, though there was some recovery from the initial part of the day but finally they only added to their previous session’s biggest one-day decline since June. Technology companies have been leading the market higher after the dip in the market during the lockdown induced by the coronavirus pandemic.
These stocks regained momentum to pre-pandemic levels in recent months. However, according to some market experts, a major selloff was primarily triggered by worried investors due to crisis in the US job market. Though, there were some who also believed that these stocks traded on the higher side and the correction was due, the actual cause of this selloff is still difficult to ascertain. Investors could not get any support from the slightly better than expected August job report by the US labour department, where the unemployment rate fell to 8.4 per cent, and employers added 1.4 million jobs during the month.
Apple Inc shares fell by nearly 7 per cent; Amazon shares fell over 6 per cent; Alphabet was down around 4 per cent, and Microsoft tanked by more than 4 per cent in the last two days.
Big technology giants have witnessed a huge surge in their market capitalisation in recent months as the sector seem to be unaffected by the catastrophe caused by the coronavirus pandemic. Market experts believed that these firms would continue to make profits despite the economic fallout.
The plunge in Apple’s share prices knocked off a substantial value. Recently, Apple Inc had reached a $2 trillion milestone in terms of market capitalisation. It had become the first listed company in the United States to break the $2 trillion barrier.
Do read: Apple's Stock Market Value Tops $2 Trillion- Which FTSE 100 Tech Stock Can Lead the UK Market?
Impact on the LSE listed tech stocks
Market sentiment in the UK were driven by the US news once again. The selloff ended the rally on the London’s broader equity benchmark index, FTSE 100 closed at 5,799, down by 0.89 per cent from previous closing. The London stock market which seemed to have steadied lost around 2.5 per cent in the last two days, tailing the steep sell-off in the US market. The technology stocks in the UK mostly mirrored the selloff in the United States.
Do Read: Performance Review of Two Technology Stocks - Gooch & Housego and Concurrent Technologies
Let us discuss the stock performance of some FTSE listed technology stocks.
- Avast Plc
Avast Plc (LON:AVST) is a Prague, the Czech Republic-based Company that offers security software. The Company has a cash-generative business model and witnessed organic growth in revenue so far in 2020.
Avast Plc shares last traded at GBX 530.50 on 4 September 2020, down by 0.75 per cent versus the previous day closing price. Since the lockdown in March, the stock has rallied by nearly 90 per cent.
- AVEVA Group Plc
AVEVA Group Plc (LON:AVV) is a Cambridge-headquartered engineering & industrial software company, which creates industrial software that inspires people to shape a sustainable future. Overall, the Company has shown solid performance in the first quarter of the financial year 2021, with robust Subscription revenue. AVV experienced strong demand, particularly in cloud solutions and won multiple orders from different sectors. Driven by large contract renewals, AVEVA has strong order pipeline for FY2021.
AVEVA Group shares last traded at GBX 4,718.00 on 4 September 2020, down by 3.36 per cent versus the previous day closing price. Since the lockdown in March, the stock has rallied by nearly 65 per cent.
- Computacenter Plc
Computacenter Plc (LON:CCC) is a Hatfield, the UK headquartered Company, which is engaged in the business of providing information technology infrastructure services. The Group expects better profitability in the second half of the fiscal year 2020.
Computacenter shares last traded at GBX 2,094.00 on 4 September 2020, up by 0.96 per cent versus the previous day closing price. Since the lockdown in March, the stock has rallied by nearly 124 per cent.
- Sage Group Plc
Sage Group Plc (LON:SGE) is an FTSE 100-listed provider of business software. Sage businesses have seen the limited impact of Covid-19 and continue to make an investment in Cloud business. The Group’s total organic revenue increased by 4.1 per cent to £1,395 million in the first nine months ending 30 June 2020.
Sage Group shares last traded at GBX 703.00 on 4 September 2020, down by 2.77 per cent versus the previous day closing price. Since the lockdown in March, the stock has rallied by nearly 31 per cent.
- Softcat Plc
Softcat Plc (LON: SCT) is an FTSE 250 listed Company, which provides technology services and solutions. The Company has shown a satisfactory level of trading performance in the fourth quarter of FY2020 with strong cash generation.
Softcat shares last traded at GBX 1,301.00 on 4 September 2020, down by 2.77 per cent versus the previous day closing price. Since the lockdown in March, the stock has rallied by nearly 44 per cent.
Technology stocks are on top of the bucket list for most of the avid investors. These businesses are always in demand as they undergo constant evolution and innovation. Despite the economic fallout caused by the coronavirus pandemic, the tech stocks have delivered double-digit returns since the lockdown in March.
