Zip Co Ltd (ASX: Z1P) and Afterpay Ltd (ASX: APT) shares are currently standing tall amid today's selloff in the broader S&P/ASX 200 Index (ASX: XJO).
In afternoon trade, the ASX 200 is down 1.7% to 7,249 after briefly touching 7,400 for the first time last Friday.
The S&P/ASX Financials (INDEXASX: XFJ) is the main sector weighing down the market today, with banking heavyweights included in the fall.
The big four banks, Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) are down 4.9%, 1.84%, 2.46% and 2.80% respectively.
Despite the broader market experiencing a sharp pullback from record highs, Zip and Afterpay shares have managed to eke out some gains, up 1.72% and 2.38% respectively.
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What's buoying Zip and Afterpay shares?
Tech shares holding ground
On Friday night, the US market experienced a similar selloff, led by the S&P 500 Index (INDEXSP: .INX) and Dow Jones Industrial Average (INDEXDJX: .DJI), which fell a respective 1.31% and 1.58%.
The selling pressure was a little less severe in the case of the tech-heavy NASDAQ-100 (INDEXNASDAQ: NDX) down 0.92%, while US-listed buy now, pay later (BNPL) company Affirm Holdings Inc (NASDAQ: AFRM) fell just 1.74%.
A similar narrative is unraveling on the ASX, with the S&P/ASX Information Technology (INDEXASX: XIJ) holding up, down just 0.21%.
Interest rate hikes on the horizon?
The United States Federal Reserve raised its inflation expectations last Wednesday, potentially bringing forward its timeline for interest rate hikes.
Fed Chairman, Jerome Powell flagged in his press conference that the strong rebound in the US economy could "[raise] the possibility that inflation could turn out to be higher and more persistent than we anticipate".
According to CNBC, a majority of Fed committee members expect two rate hikes in 2023.
Tech shares typically perform better under a low interest rate environment, but according to Frazis Capital Partners portfolio manager Michael Frazis, there could be a window of opportunity to buy tech.
Despite the increasing concerns that interest rate hikes are on the horizon, benchmark US treasury yields slipped 4.17% on Friday night, to a 4-month low of 1.449%. Tumbling yields could be a factor keeping tech shares afloat in today's session.
Afterpay share price playing catch up
Many BNPL shares still have a long way to go before reaching breakeven for the year.
The Afterpay share price is still down about 2.3% year-to-date and down 26% since its record all-time high of $160.05 in February.
