Do you remember when the reemergence of long-absent inflation was going to tank blue chip technology shares? When government bond yields were rising and suddenly these high growth, mega-cap tech shares looked overvalued?
Of course you do. It was only a matter of days ago.
Investors fearing an imminent rise in interest rates fled some of the world’s best know tech shares. And in less than a month, from 12 February through to 8 March, the tech-heavy Nasdaq-100 (INDEXNASDAQ: NDX) plummeted 11%, putting it into technical correction territory.
Now there have only been 3 trading days in US markets since the closing bell on 8 March. And in those 3 days, the Nasdaq-100 (which contains 100 of the largest technology-related shares on Earth) gained 5.1%. That’s just 5.5% below its all-time 12 February highs.
Another welcome reminder not to get overly hung up in the latest market angst.
What’s driving tech shares back towards record highs?
There’s no doubt that one of the biggest drivers behind the resurgent tech shares is President Joe Biden’s US$1.9 trillion COVID recovery package, which just passed its final hurdles in the United States.
Chris Gaffney, president of world markets at TIAA Bank, is extremely bullish on the outlook for shares going forward (quoted by Bloomberg):
The administration has slipped a little bit of extra fuel to the equity markets with their bill. It’s going to be rocket fuel. We’re headed to new highs because of all that stimulus money that’s being put out there and it’s more broad-based than the first couple stimulus programs.
Inflation fears have also been calmed here in Australia by Reserve Bank of Australia (RBA) governor Philip Lowe. Speaking this week, Lowe stressed the RBA almost certainly won’t move interest rates higher until at least 2024.
That’s likely helped drive our own tech index, the S&P/ASX All Technology Index (ASX: XTX), to a 7.4% gain since lunchtime on Tuesday, 9 March.
While there are some great ASX tech shares to invest in, Aussies looking for exposure to the tech giants trading on the Nasdaq-100 can do so with an ASX listed exchange traded fund (ETF).
Namely, the Betashares Nasdaq 100 ETF (ASX: NDQ).
Betashares Nasdaq 100 ETF share price snapshot
NDQ’s top holdings include all the so-called FAANG shares, along with 95 other blue-chip, non-financial shares trading on the Nasdaq.
And long-term shareholders will have little to complain about, with shares up 37% in 12 months. Over that same time, the All Ordinaries Index (ASX: XAO) is up 31%.
Betashares Nasdaq 100 ETF share price is edging higher in intraday trade today, up 1.3%.