Global stocks of technology were under pressure on Wednesday as less and less concerns about the Omicron coronavirus variant and interest rate bets reduced the attractiveness of groups that thrived during the pandemic.
Hong Kong’s Hang Seng index fell 1.6 percent and its technology subsector lost 4.6 percent. This marked the worst decline in technology stocks traded in the city since July.
The move in Hong Kong resonated in trading on Wall Street on Tuesday, with future markets suggesting U.S. technology stocks could fall another day.
Contracts tracking the Nasdaq 100 index fell 0.4 percent after a technology-focused Wall Street stock index fell 1.3 percent in the previous session.
Shares of electric car maker Tesla fell 1 percent in pre-market trading, while Microsoft fell 0.3 percent and Apple was left without value.
In Europe, the Stoxx 600 capital index rose 0.1 percent, while its technology sub-index fell about 0.1 percent lower. ASML, the Dutch semiconductor equipment maker and Europe’s largest technology company by market capitalization, fell 0.2 percent after falling nearly 3 percent on Tuesday.
Technical stocks subsequently fell into disfavor early data suggested that Omicron was less likely than previous strains to result in hospitalizations and therefore widespread closure.
“The Omicron variant looks rather mild, with an increase in the number of cases that do not result in more deaths, raising hopes that an end to the pandemic is in sight,” said Emmanuel Cau, head of European capital strategy at Barclays.
This optimism this week boosted the shares of so-called cyclical companies – companies whose wealth is closely linked to economic trends – such as banks and energy producers.
Components of the $ 11.3 billion Wall Street FANG + index, such as Apple and Amazon, were the biggest winners in the publicly traded pandemic, as measured by the growth in market capitalization in dollars since January 2020. according to Financial Times study.
The FANG + group makes up 27 percent of the S&P 500, according to Bloomberg data based on Tuesday’s closing prices.
“Even if global stocks give a reasonable return this year, the U.S. market will struggle,” said Paul Jackson, head of asset allocation at Invesco.
Due to the dominance of large technology companies in the index, he added, S&P has “become a market that performs better during economic downturns”.
While the outlook for technology groups has been driven by closures and other societal constraints, their assessment has been flattered by ultra-low bond yields that reduce the opportunity cost of owning developing companies that pay minimal or no dividends.
Traders also gave up U.S. Treasury bonds this week, a haven of assets favored in times of economic uncertainty, lowering the price of debt instruments and increasing their yields.
U.S. Federal Reserve officials, who are abolishing pandemic-era monetary incentives, expect the central bank will raise interest rates three times this year, according to projections released late last year.
Yield on the benchmark 10-year U.S. Treasury, which moves the reverse of the price of debt, fell 0.02 percentage points to 1.466 percent on Wednesday, but rose from about 1.5 percent on Dec. 31.
Elsewhere in the markets, the UK’s FTSE 100 rose 0.2 per cent after gaining 1.6 per cent on Tuesday, thanks to a high concentration of business in banking, energy and resources. Germany’s Dax rose 0.6 percent, driven by consumer and industrial stocks.
Brent crude was stable at $ 80 a barrel. The benchmark for oil fell to just $ 69.28 in late December, depressed by Omicron’s concerns.