The ASX200 is within an arms reach of pre-COVID highs but it often feels like your ASX200 shares aren’t running with the market. Why is this the case?
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The S&P/ASX200 (INDEX: XJO) has pushed 3% higher in April and 5% higher year-to-date to above the 7,000 mark.
However, it sometimes doesn’t feel like a broad-based rally for all ASX200 shares. Here’s why your ASX 200 shares might be sitting on the sidelines.
A selective market
Not all sectors and ASX 200 shares are created equal. When it comes to the ASX 200, the index is heavily concentrated towards financials, notably the big 4 banks. A 1-2% swing in the big 4 banks can give the illusion that the broader market is doing well. However, this may not represent the performance of another sector such as tech or commodities.
The big 4 banks have rebounded strongly in recent months and within 5% of pre-COVID highs. And thus, the ASX 200 has followed suit.
The S&P/ASX200 Info Tech (INDEX:ASX: XIJ) on the other hand, has had a relatively lacklustre performance in 2021. The tech index is down 1.2% year-to-date and down 9.50% from its peak in February.
Too much attention on popular stocks
Commsec’s weekly top traded Australian shares often has small cap and tech shares top the ranks.
This feeds into the point that the Australian market is heavily skewed towards financials. Furthermore, this may not necessarily reflect the performance of the ASX200 shares that everyone’s looking at.
The 5% year-to-date increase in the ASX 200 compared to the 1.2% decline in the tech index might explain why some ASX 200 shares aren’t moving with the market.
COVID-19 tempering growth and expectations
COVID-19 saw a boom in many industries such as supermarkets and ecommerce. But as things slowly return to normal, investors can’t expect the company to deliver the same growth it did the year before.
Last night, Netflix Inc (NASDAQ: NFLX) shares took a 7.4% dive after its quarterly earnings. The global streaming service added 3.98 million subscribers in the first quarter compared to its 6 million forecasts.
The company said that COVID-19 had accelerated its growth while people were stuck at home, but the opposite is now happening as vaccine programs are underway and social mobility returns.
A number of ASX 200 shares in the tech, consumer discretionary, and consumer staples sectors might have experienced the same phenomenon.
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Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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