ASX tech shares are on fire and outperforming the S&P/ASX 200 Index (ASX: XJO) with more than twice the gains on Friday.
The S&P/ASX 200 Information Technology Index (ASX: XIJ) is up 1.7% at the time of writing, while the ASX 200 is up 0.87%.
The tech sector is easily the best-performing market sector today.
Let's take a look at some of the ASX tech shares with the highest gains so far today.
Today's best-performing ASX tech shares
Here are some of today's best-performing ASX tech shares:
- WiseTech Global Ltd (ASX: WTC) up 2.33%
- Life360 Inc (ASX: 360) up 2.32%
- Xero Limited (ASX: XRO) up 1.74%
- TechnologyOne Ltd (ASX: TNE) up 1.70%
- Altium Limited (ASX: ALU) up 1.49%
- NextDC Ltd (ASX: NXT) up 1.18%.
Small-cap ASX tech shares are also screaming up the charts on Friday.
Some examples are:
- Weebit Nano Limited (ASX: WBT) up 6.33%
- Bravura Solutions Ltd (ASX: BVS) up 5.1%
- Catapult Group International Limited (ASX: CAT) up 5.00%.
Why are tech shares killing it on Friday?
The likely catalyst for today's spike in ASX tech shares is yesterday's news of lower inflation in the United States.
The latest inflation data came in at 3%, which was slightly lower than the market's expectations of 3.1%.
This is the lowest inflation rate recorded in two years.
Macquarie managing director Viktor Shvets described the drop to 3% as "immaculate disinflation", as reported in the Australian Financial Review (AFR) yesterday.
Shvets was referring to the taming of inflation without a large rise in unemployment or a major economic slowdown.
The news got the US share markets very excited because it reduces the chances of another interest rate hike by the US Federal Reserve. In fact, it may mean the hiking cycle is over.
And, of course, what happens in the US markets flows onto the ASX.
That's why the ASX 200 closed 1.56% higher on Thursday and why it's rising again today.
ASX tech shares respond better to this type of economic news because they are younger companies that typically carry more debt than the established ASX 200 companies. Thus, the impact of rising interest rates can be higher on tech companies' balance sheets.
Overnight, the NASDAQ 100 (INDEXNASDAQ: NDX), Dow Jones Industrial Average (DJX: .DJI), and S&P 500 Index (SP: .INX) all lifted for a second consecutive day.
The Dow Jones Index added another 0.14%, the S&P 500 rose by another 0.85%, and the NASDAQ rocketed 1.73% overnight.
What does the US inflation news mean for our interest rates?
ANZ Bank now expects the Reserve Bank to hold the cash rate at 4.1% at its next meeting in August.
According to the AFR, ANZ chief economist Adam Boyton said the bank had revised its expectations for the August RBA decision due to the US inflation numbers, a "deterioration" in forward-looking jobs market indicators, and the bank's spending data.
Prime Minister Anthony Albanese announced today that RBA Governor Philip Lowe will be replaced by Deputy Governor Michele Bullock when his seven-year term expires in September.
Bullock was appointed deputy just last year and will be Australia's first female RBA governor.
