The Zip Co Ltd (ASX: ZIP) share price crashed to a near four-year low this morning as the ASX tech sector came under intense selling pressure.
The S&P/ASX All Technology Index (ASX: XTX) shed almost 6% shortly after the open following a poor lead from its US counterparts. This makes the tech sector the worst performer so far today.
Inflation fears pressuring the Zip share price
The higher-than-expected inflation reading from the world’s largest economy is stoking the fires of fear. Overnight it was revealed that US inflation is currently at 8.3%, which remains close to the 40-year high of 8.5% recorded in March. Investors are worried that the US Federal Reserve will have to aggressively raise interest rates to cool rising prices.
Higher rates are bad news for risk assets, particularly growth shares which typically trade at a premium with little to no profits.
Given how globalised markets are, rising US rates could also put more pressure on the Reserve Bank of Australia to lift rates here.
More bad news
Little wonder the Zip share price has lost a further 5% to hit 95.5 cents at the time of writing. It was only two days ago that the buy now, pay later (BNPL) share crashed under $1 due to much to the same headwinds.
But there could be more bad news for long-suffering Zip shareholders. Charities and consumer groups are calling for tighter regulation on the BNPL sector – no matter who wins government this month.
The surging cost of living is pushing more vulnerable consumers to use BNPL services to pay for daily essentials, according to these groups.
How the Zip share price is performing
Zip isn’t the only ASX tech share feeling the pain from the wider tech sell-off this morning. Shortly after open, the Block Inc (ASX: SQ2) share price crashed 15.8% to a new 52-week low of $102. The Splitit Ltd (ASX: SPT) share price lost 7.1% to 26 cents and Humm Group Ltd (ASX: HUM) shed 2.7% to 72 cents.
However, over the past year, the Zip share price has been the laggard within the group. Zip shares have collapsed 85%. The Block share price is down 41% and the Splitit share price has lost 60%. The Humm share price is faring better with a more modest 17% decline.