There's one highly diversified ASX share I think is a buy right now following the overnight pullback in US tech stocks.
As we covered here earlier, US markets closed sharply lower overnight following hotter-than-expected inflation readings through to the end of March.
Headline inflation was up 0.4% in March, running at 3.5% on an annual basis. That's up from 3.2% last month and remains significantly higher than the US Federal Reserve's 2% target.
With investors paring back expectations of the timing and number of interest rate cuts, ASX shares are joining in the overnight US retrace, with the All Ordinaries Index (ASX: XAO) down 0.6% in afternoon trade.
In the US, the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) closed down 0.8% while the NASDAQ-100 Index (NASDAQ: NDX), which holds 100 of the largest tech stocks, ended the day down 0.9%.
Which brings us to the ASX share to buy right now.
Why this ASX share is a buy
The ASX share in question is the Betashares NASDAQ 100 ETF (ASX: NDQ).
NDQ is an ASX-listed exchange-traded fund (ETF), and you can buy and sell shares just as you would with any other stock.
The ETF aims to track the performance of the Nasdaq 100, providing investors with exposure to some of the world's leading tech companies at the forefront of the new economy with a single ASX investment.
NDQ's top five holdings are: Microsoft Corp (NASDAQ: MSFT), Apple Inc (NASDAQ: AAPL), Nvidia Corp (NASDAQ: NVDA), Amazon.com, Inc. (NASDAQ: AMZN), and Meta Platforms Inc (NASDAQ: META), or Facebook to you and me.
Annual management fees run at 0.48%.
Just like US tech stocks, this ASX share has been shooting higher. Shares in the ETF are up 12% year to date and up 38% over 12 months.
Why now?
So, with inflation proving sticky and interest rates potentially staying elevated for longer than expected, why is now the time to buy the Betashares NASDAQ 100 ETF?
First, I believe this ASX share will continue to outperform on the back of the nascent AI revolution. Just have another look at the ETF's top five holdings. All of these companies are heavily involved in AI. And all of them could hit new highs in the year ahead amid any new AI breakthroughs.
I'm also optimistic about the outlook for the US economy, which has proven resilient over the past 18 months despite high inflation and soaring interest rates.
As Jefferies chief market strategist David Zervos says (quoted by Bloomberg):
Risk assets should stabilise here and resume their uptrend as good news on the economic growth front will dominate the headwinds from a Fed that needs to stay a little higher for a little longer to fully anchor long-run inflation expectations.
Finally, good news for the economy could spell good news for US and ASX shares!
