The Nearmap Ltd (ASX: NEA) share price is surging into the green today.
At the time of writing, the share is trading more than 9% higher at $1.26 apiece on no news.
In broad market moves, the S&P/ASX All Technology index (ASX: XTX) is also lifting around 4% into the green on Wednesday.
What's up with the Nearmap share price?
ASX tech shares have caught a bid today as yields on long-dated US Treasuries nudge back underneath 3%.
The yield on the US 10-year Treasury note is at 2.90% at the time of writing, 20 basis points down from the previous high of 3.1% on 8 July.
The pricing of the ASX tech basket is inversely related to these yields. An increase in the US 10yr yield will cause tech shares to de-rate, and vice versa.
This relationship can be seen on the chart below, noting the cross between growth and yields in March/April.
This backdrop is important to understand when analysing the Nearmap share price and its pathway to date.
Nearmap is highly correlated to the tech sector, as seen below. It therefore displays the same inverse characteristics to the US 10-year yield as the ASX tech benchmark.
Moreover, portfolio managers often talk in terms of 'beta' regarding a stock's returns.
In this case, the term beta refers to the tightness between the price returns of a share and a benchmark (eg. the XTX) move together.
Nearmap has a 2-year equity beta of 1.89 to the tech index according to Refinitiv Eikon data. A score above 1 is considered high.
In fact, this relationship is observed on the chart above, with both instruments tracking each other in striking similarity.
With that in mind, it's unsurprising to see Nearmap rallying to 9% higher on no news today. This tends to be the case in high beta stocks, they benefit – and suffer – greatly from movements in the wider sector.
In the last 12 months, the Nearmap share price has slipped 40% into the red, whereas the ASX tech sector is down 29%.
