It finally looks set to be a good day for Australian tech shares on Wednesday.
This follows a very positive session on Wall Street’s technology-focused Nasdaq index overnight.
Investors were fighting to buy beaten down US tech stocks after bond yields declined on Tuesday.
According to CNBC, the US 10-year Treasury yield fell more than 6 basis points to 1.52% yesterday. This means the benchmark rate is now down 10 basis points from its Monday high of 1.62%.
The tech-heavy Nasdaq Composite index climbed over 4.1% overnight thanks to very strong gains by giants such as Amazon, Apple, Facebook, and Tesla. The latter was a particularly positive performer, wiping out almost five days of declines by rising over 20%.
Vital Knowledge’s Founder, Adam Crisafulli, commented: “After lagging badly for the last few weeks, growth/momentum stocks are exploding higher as investors grow a bit more comfortable around rates and step in to buy this erstwhile most-loved sector.”
Will this rebound be sustained?
Miller Tabak’s Chief Market Strategist, Matt Maley, appears cautious on the rebound and unsure whether it is going to last.
Mr Maley said: “A lot of these tech stocks have become oversold on a short-term basis. Therefore, it’s not a big surprise that they’re seeing a nice bounce. The question will be whether this bounce is a strong one…or a ‘dead cat bounce’ that doesn’t last very long at all.”
But one thing that is for sure, is that it looks set to be a very good day of trade for beaten down Australian tech shares such as Afterpay Ltd (ASX: APT), Altium Limited (ASX: ALU), and Zip Co Limited (ASX: Z1P) on Wednesday.
With their shares down heavily over the last month, as outlined here, they look likely to follow the lead of their US counterparts and rebound strongly today.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.