Why the Zip share price is surging 12% higher today

Zip shares are having a stellar day…

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Key points

  • Zip shares are the best performers on the ASX 200 on Thursday.
  • Investors have been buying Zip and other tech shares in response to the US Fed's rate hike. 
  • Investors appear pleased with the central bank's confidence in the US economy.

The Zip Co Ltd (ASX: Z1P) share price is giving shareholders a reason to smile at long last on Thursday.

In afternoon trade, the buy now pay later (BNPL) provider’s shares are the best performers on the ASX 200 index.

At the time of writing, the Zip share price is up over 12% to $1.62.

Why is the Zip share price charging higher?

Investors have been bidding the Zip share price higher today amid a strong rally in the tech sector.

It isn’t just Zip that is on form, the S&P/ASX All Technology index is up a massive 4.2% at the time of writing. This is more than double the gain being made by the ASX 200 index.

What’s going on?

The catalyst for this has been a very strong night of trade on Wall Street’s tech focused Nasdaq index. It rose a sizeable 3.8% after investors responded positively to the US Federal Reserve’s decision to raise interest rates for the first time in three years.

And while concerns over rate rises have weighed down shares in recent months, the rhetoric out of the central bank appears to have boosted sentiment.

Bloomberg reports that Fed Chair Jerome Powell said the US economy is “very strong” and can handle monetary tightening.

This has gone down well with investors on both sides of the Pacific and given the Zip share price a much-needed boost today.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended 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.

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