S&P/ASX 200 Index (ASX: XJO) tech shares are broadly enjoying a strong run today.
In late morning trade, the ASX 200 is up a healthy 0.5%.
But tech shares are faring even better. The S&P/ASX All Technology Index (ASX: XTX) – which contains some smaller tech stocks outside of the ASX 200 – is up 3% at this same time.
As for ASX 200 tech shares, these three are leading the charge on Thursday:
- Shares in WiseTech Global Ltd (ASX: WTC), a provider of cloud-based software solutions for the logistics sector, are up 5.1%
- Accounting software provider Xero Limited (ASX: XRO) is up 7.2%
- And shares in Megaport Ltd (ASX: MP1), which provides Network as a Service (NaaS) solutions, are up 5.7%
You certainly won't hear investors complaining about those figures!
So, what's driving today's rally?
Image source: Getty Images
What's driving the tech stock rally today?
There are no price-sensitive releases out from any of these three ASX 200 tech shares today.
Which tells me the rally is broadly being driven by two factors.
First, Facebook owner Meta Platforms (NASDAQ: META) reported strong quarterly sales overnight and announced a US$40 billion (AU$56 billion) share buyback. The Meta share price has surged 20% in after-hours trading on the news, offering some strong tailwinds for the tech sector.
Second, investors look to be rewarding the ASX 200 tech shares following the subdued interest rate hike from the US Federal Reserve. That helped the Nasdaq Composite Index (NASDAQ: .IXIC) close 2% higher overnight.
Why celebrate a rate increase?
Because the 0.25% hike, while broadly expected, is the lowest increase the Fed has delivered in some time, having boosted rates by 0.50% in December and by 0.75% at its four prior meetings.
Though warning that investors can expect several more rate hikes, Fed chair Jerome Powell said inflation pressures in the United States are showing signs of easing.
That's particularly welcome news for most tech companies, which are often priced with future earnings growth in mind. As interest rates ratchet higher, so too does the present cost of investing in those earnings.
How have these ASX 200 tech shares been tracking?
After a difficult second half of 2022, two of the three ASX 200 tech shares named above are off to a smashing start.
As you can see on the below charts, Megaport is the only one that remains in the red for 2023, down 2.9% from the opening bell on 3 January.
WiseTech shares, on the other hand, have leapt out of the gate, up 27.5% in the new year.
And Xero is no laggard either, with shares up an impressive 17.6% so far in 2023.
