Wall Street might have paved the way for another hair-raising drop for S&P/ASX 200 Index (ASX: XJO) tech shares on Tuesday.
Major US indices tumbled overnight but it was technology stocks that were the most hard-hit as bond yields itched higher.
The yield on benchmark 10-year Treasury notes rose to highs of 1.51% from 1.46% on Monday. It was just a month ago that yields were sitting at around 1.32%.
This comes just before the US Federal Reserve signalled that it will begin reducing its monthly bond purchases as soon as November, which could lower bond prices and push yields even higher.
The Nasdaq Composite plunged 311 points or 2.14% while the S&P 500 and Dow Jones Industrial Average fell 1.3% and 0.94% respectively. Perhaps signalling a continued rotation out of technology and back into safe haven assets such as bonds and gold.
Big tech led the declines with heavyweights Facebook, Amazon, Microsoft, Alphabet and Apple all sliding between 2% to 4.9%.
This could point to a continued weakness for ASX 200 tech shares, especially given that ASX futures are currently pointing to a 68 point or 0.94% decline.
ASX 200 tech shares on watch
The Afterpay Ltd (ASX: APT) share price could be set to fall this morning after Square shares fell 5.43% overnight to a 2-month low of US$226.25.
The largest US-listed BNPL player, Affirm, also posted significant declines, down 8.42%.
This could place the broader ASX-BNPL sector on watch, especially big names like Zip Co Ltd (ASX: Z1P) and Sezzle Inc (ASX: SZL).
Weakness in the Global X FinTech Exchange Traded Fund (ETF) might also affect ASX-listed players such as Xero Limited (ASX: XRO), Tyro Payments Ltd (ASX: TYR) and EML Payments Ltd (ASX: EML).
The FinTech ETF tanked 3.72% overnight and is comprised of leading companies in the emerging financial technology sector. Its top 5 holdings include household names such as Adyen, Square and PayPal.
