Here’s why ASX 200 tech shares are taking a beating on Wednesday

Global share markets are forecast to remain volatile until inflation is brought under control.

| More on:
A man yells as his virtual reality headset and earphones tumble to the floor.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • ASX 200 tech shares are in the red on Wednesday 
  • The tech-heavy Nasdaq closed down 3% overnight 
  • Investors remain on edge over inflation, interest rates, and recession concerns 

S&P/ASX 200 Index (ASX: XJO) tech shares are feeling the heat today.

While the ASX 200 is down 1.1% in late afternoon trading, technology stocks are broadly faring worse.

A look at the S&P/ASX All Technology Index (ASX: XTX), which contains some smaller companies outside of ASX 200 tech shares, reveals the index is down 3.7%.

Top ASX 200 tech shares sliding today

Today’s selling action sees cloud accounting services provider Xero Limited (ASX: XRO) down 5.6% to $77.98 per share.

Global online real estate advertising company REA Group Limited (ASX: REA) is trailing the benchmark too. REA shares are down 2.8% to $111.83.

And payment services provide Block Inc (ASX: SQ2) is following a similar path on the ASX today as its NYSE entity did yesterday (overnight Aussie time). The buy now, pay later (BNPL) giant, which acquired Afterpay back in January, closed down 5.5% in the US markets. It’s currently down 6.5% on the ASX, trading for $94.05 per share. Ltd (ASX: CAR) is putting in the worst performance among the ASX 200 tech shares today. Shares in the online vehicle and boat classified company are down 12.3% to $18.20 per share.

Carsales looks to be under specific selling pressure following this morning’s announcement that it had successfully raised some $842 million for $17.75 per share. That’s a sharp discount from yesterday’s closing price of $20.76 per share.

Why is the tech sector under pressure?

ASX 200 tech shares are under selling pressure today following some heavy selling in US markets. As investors unloaded US tech stocks, the Nasdaq closed the day down 3%.

Investors remain jittery about the potential of a US recession, as inflation continues to run hot and global central banks join the Federal Reserve in hiking interest rates.

Last month the Fed hiked the official US benchmark rate by an outsized 0.75%. And investors are bracing for the potential of a similar rate increase from the influential central bank in July.

What next for ASX 200 tech shares?

Investor jitters have ramped up volatility in the global stock markets, with tech shares seeing some of the biggest price swings. And analysts are predicting there’ll be more big price moves ahead.

According to Jason Draho, head of asset allocation for the Americas at UBS Global Wealth Management (quoted by Bloomberg):

The one thing that we can say with conviction is that high market volatility is likely to persist until there’s clear evidence that inflation is declining and the Fed pivots towards a less hawkish stance, taking the off-ramp away from the recession destination.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and Xero. The Motley Fool Australia has positions in and has recommended Block, Inc. and Xero. The Motley Fool Australia has recommended REA Group Limited and Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

Three colleagues stare at a computer screen with serious looks on their faces.
Dividend Investing

‘Exciting’ ASX 200 dividend share expected to deliver material returns: expert

Investors seeking income stocks need to do more than simply look at what the companies paid out over the past…

Read more »

Two men laughing while bouncing on bouncy balls
Share Gainers

Why is the BrainChip share price bouncing 6% higher today?

What's causing the BrainChip share price to pop on Tuesday?

Read more »

Man pointing at a blue rising share price graph.
Earnings Results

Megaport share price rises as revenue lifts 40%

Investors appeared to react positively to Megaport's results.

Read more »

a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.
Technology Shares

Here are 2 excellent ASX tech shares a top broker says are buys

Here are two highly rated ASX tech shares...

Read more »

A cloud with a blue arrow pointing upwards through its middle symbolising a rising asx share price
Share Gainers

Guess which ASX tech share just soared 40% on takeover news

This small-cap ASX tech share has shot up 40% today.

Read more »

A man leaps through the air with a swimming cap and a look of uncertainty.
Share Gainers

Why is the Appen share price jumping 10% on Monday?

What's going on with Appen shares?

Read more »

A frustrated male investor frowns with his hands and arms open asking why the share price has dropped today
Technology Shares

Why is the Novonix share price having such a lousy start to the week?

The Novonix share price is handing back some of its recent gains.

Read more »

a small child carrying a brief case tries to reach an elevator button outside closed elevator doors.
Technology Shares

Why are Betmakers shares attracting increased short interest lately?

Could this be why more short-sellers are snapping up the stock?

Read more »