Insights

Are ASX tech shares like Afterpay (ASX:APT) back to the races?

ASX tech shares like Afterpay (ASX:APT) have staged a remarkable recovery this week. Here’s why investors are falling back in love with tech
The post Are ASX tech shares like Afterpay (ASX:APT) back to the races? appeared first on The Motley Fool Australia. –

Investor with palm up and graphic illustration of asx small cap tech shares charts shooting from his hand

The S&P/ASX 200 Index (ASX: XJO) seems to be on a chocolate high. Since the Easter long weekend, the ASX 200 has gotten a second wind, rising a healthy 1% since last Thursday at the time of writing. But one ASX sector seems to be enjoying the lion’s share of the goodwill on the share market. ASX tech shares have had an exceptional week. Since Thursday afternoon, the S&P/ASX All Technology Index (ASX: XTX) is up 5.7%. It’s also up 9.2% since 30 March, just a bit over a week ago.

ASX tech shares of all stripes are participating in these gains. Take Afterpay Ltd (ASX: APT). Afterpay shares are up 3.4% today and are, at the time of writing, back above $120 a share. It was only last week that Afterpay had done the unthinkable and fell down to just over $101 after making a new all-time high of $160 a share in February. Other ASX tech shares are also bouncing back. Zip Co Ltd (ASX: Z1P) shares are up almost 16% since 30 March after falling close to 50% since 16 February at one point. It’s a similar story with Xero Limited (ASX: XRO), which is up more than 20% over the past month.

There has been a pretty enthusiastic bounce for ASX tech shares whichever way you look at it. Of course, that comes after what has been a horror month or two for tech. Between 10 February and 9 March, the All Technology Index fell 18%. Even after today’s moves, the index remains down more than 8% from its February high.

So what’s behind this move?

Bonds fall and push tech higher

Well, it’s not hard to find a possible answer if we look at what was holding ASX tech shares down in the first place. And that would be rising bond yields. As we’ve covered rather extensively over the past month or two, government bond yields have been on the rise lately. That’s both here and in the United States. Higher government bond yields result in many investors re-valuing tach shares. That’s because these companies are often priced on their future cash flows rather than what they make today.

But US government bond yields have actually been backtracking. As we reported last month, the US 10-year government bond yield hit a high of more than 1.77% on 31 March, its highest level since January 2020. But today, those same bonds have a yield of 1.67%.

This has sparked a surge in US tech shares. Since 30 March, the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) index is up around 5%. It’s likely that the ASX tech sector is taking its queues from US tech shares this week. If US government bonds remain off the boil or even fall further, it could well be back to the races for tech shares, and on to new highs.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Are ASX tech shares like Afterpay (ASX:APT) back to the races? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!