Thursday thrashing: ASX tech shares tumble

ASX tech shares are down heavily on Thursday.
The post Thursday thrashing: ASX tech shares tumble appeared first on The Motley Fool Australia. –

ASX tech shares are having a tough day today. The S&P/ASX All Technology Index (ASX: XTX) is currently down by more than 5%.

Some of the biggest names in the technology sector are seeing the worst falls. For example:

The Xero Limited (ASX: XRO) share price is down 12%
The Life360 Inc (ASX: 360) share price is down 9.5%
The Block Inc (ASX: SQ2) share price is down 15%
The Altium Limited (ASX: ALU) share price is down 11%
The WiseTech Global Ltd (ASX: WTC) share price is down 4.5%
The REA Group Limited (ASX: REA) share price is down 3.5%
The SEEK Limited (ASX: SEK) share price is down 3.7%

Not every business in the S&P/ASX 200 Index (ASX: XJO) is seeing a decline, though the index is currently down 1%.

The Commonwealth Bank of Australia (ASX: CBA) share price is up 1% after the big four bank reported its quarterly update. The BHP Group Ltd (ASX: BHP) share price is up 0.3% as well.

Why are ASX tech shares hurting so much?

Sometimes, the ASX tech sector is influenced by what happens to international tech shares during the US trading session.

Overnight, the Nasdaq 100 Index (NASDAQ: NDX), which is made up of many of the world’s largest tech names, dropped by 3%. The Apple Inc (NASDAQ: AAPL) share price fell 5.2% and the Microsoft Corporation (NASDAQ: MSFT) share price dropped 3.3%. The Meta Platforms Inc (NASDAQ: FB) share price declined 4.5% and the Inc (NASDAQ: AMZN) share price dipped by 3.2%. The Tesla Inc (NASDAQ: TSLA) share price sank 8.25%.

But there’s another question – why did those shares fall so much?

There has been a lot of market focus on how strong inflation is at the moment. The latest US inflation data was just released and the 12-month percentage change for the consumer price index was 8.3%.

This wasn’t quite as strong as the 40-year high of 8.5% registered in March but it remains elevated. Seasonally adjusted, there was a month-on-month increase of 0.3%.

According to Bloomberg, the core CPI was higher than all estimates in a Bloomberg survey of economists. The news outlet reported that investors are expecting ongoing strong moves by the US Federal Reserve to try to control inflation. There are more expectations for four straight 50-basis-point increases.

Bloomberg reported that Robert Frick, corporate economist at Navy Federal Credit Union, said: “The peak of inflation may be behind us, but today’s CPI report points to a long, slow descent or maybe even a plateau around 8%.”

Why interest rates are important for asset valuations

Interest rates are seen as an important influencer on asset prices, including ASX tech shares.

Warren Buffett once said:

The value of every business, the value of a farm, the value of an apartment house, the value of any economic asset, is 100% sensitive to interest rates because all you are doing in investing is transferring some money to somebody now in exchange for what you expect the stream of money to be, to come in over a period of time, and the higher interest rates are the less that present value is going to be. So every business by its nature … its intrinsic valuation is 100% sensitive to interest rates.

The post Thursday thrashing: ASX tech shares tumble appeared first on The Motley Fool Australia.

Wondering where you should 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 over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

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

*Returns as of January 12th 2022

More reading

Blockdown! Why is the Block share price crashing by 16% today?
Why is the WiseTech share price slipping 5% lower today?
ASX 200 midday update: CBA’s Q3 update impresses, Xero and Block crash
Zip share price tumbles 5% to another multi-year low
How much further can ASX 200 tech shares tumble? Macquarie weighs in

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has positions in Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium, Amazon, Apple, Block, Inc., Life360, Inc., Meta Platforms, Inc., Microsoft, Tesla, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended Block, Inc., WiseTech Global, and Xero. The Motley Fool Australia has recommended Amazon, Apple, Meta Platforms, Inc., REA Group Limited, and SEEK Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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.

  • This field is for validation purposes and should be left unchanged.

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 - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!