“Those niggling worries about the impact of a rise in interest rates on the value of future earnings are threatening to fast turn into a painful reckoning for many tech investors. The punchbowl of cheap and easy money being withdrawn from the party a lot sooner due to soaring inflation is inducing an early hangover for a basket of pandemic winners. It’s not just high growth stocks coming under the cosh, crypto currencies have been on another rollercoaster ride today as investors take fright from riskier assets. Bitcoin dipped below $40,000 dollars before bouncing back, as New Year resolutions of diversification came into play, with some investors offloading the crypto asset for more defensive positions. Crypto assets are highly sensitive to the fortunes of the stock market and have been propelled higher in this era of ultra cheap money, so it’s no surprise they have been hit with a severe case of the jitters as policy makers ponder their next move.
Q4 2021 hedge fund letters, conferences and more
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A Volatile Ride For Tech Stocks
The Nasdaq composite index slipped by as much as 4% in early trade, before stemming some losses and is down by around 10% from its November high. Apple Inc (NASDAQ:AAPL) retreated further away from the nascent 3 trillion dollar club, falling 2%. Chip maker NVIDIA Corporation (NASDAQ:NVDA) and Mastercard Inc (NYSE:MA) registered falls of more than 5% before recovering slightly. Amazon joined the downward trajectory, slipping by 3.6% in early trade. On the FTSE 100, Scottish Mortgage Investment Trust, which holds a raft of tech darlings like Tesla Inc (NASDAQ:TSLA), Nio Inc (NYSE:NIO) and Amazon.com, Inc. (NASDAQ:AMZN) was among the biggest fallers amid concerns the tech juggernaut is slowing. With other companies in the big data and payments space slipping back, information analytics firm Experian fell lower, ending the day down by more than 5%.
News that Take Two Interactive Software, Inc (NASDAQ:TTWO) is set to pay $12.7 billion to acquire mobile gaming company Zynga Inc (NASDAQ:ZNGA) sent its share price plunging 14%. Far from being a steal, there is clearly concern among some investors that the Grand Theft Auto maker could be paying over the odds to drive through the deal. There may still be a lot to play for in a gaming world gearing up for metaverse opportunities, but it’s still an eye watering price tag.
Even Estee Lauder was not immune to the sell-off, dropping by more than 5% amid expectations that an income squeeze could see a fall in demand for discretionary items like expensive perfume. But the lipstick effect could still come into play with a chance that consumers may still splash the cash but just opt for less expensive products from beauty ranges, as they tighten their fashionable belts further."
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
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