The S&P/ASX 200 Index (ASX: XJO) rose strongly last week with ASX tech shares leading the way.
The ASX 200 gained 3.39% over the five trading days to finish at 8,238 points on Friday, its highest level in two months.
Meanwhile, the S&P/ASX 200 Information Technology Index (ASX: XIJ) outperformed, ripping 9.55% higher over the week.
All of the 11 market sectors finished the week in the green.
Let's recap.
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Why did ASX 200 tech shares lead the market?
The biggest factor powering the surge in ASX tech share prices last week was significantly boosted expectations of interest rate cuts.
The Australian Bureau of Statistics released its March quarter inflation data last week.
The Reserve Bank's preferred measure of inflation, the trimmed mean, fell from 3.3% in the December quarter to 2.9% in the March quarter.
The trimmed mean excludes the most volatile categories of spending for the period, as well as the impact of government energy rebates.
The March quarter trimmed mean inflation rate is the lowest since the 2021 December quarter.
More importantly, it is inside the RBA's long-term inflation target band of 2% to 3%.
That means there is a high likelihood of another rate cut at the next RBA board meeting to be held in Sydney on 19-20 May.
Broker Macquarie expects 100 basis points of interest rate cuts ahead, but market pricing implies potentially even more cuts.
Rate cuts disproportionately benefit ASX tech shares because young companies typically use debt to fund their early growth.
Therefore, interest costs are high for most technology companies and rate cuts bring those costs down.
There are also expectations of another rate cut in the US after a negative GDP data report last week.
Annualised US GDP fell 0.3% over the March quarter, substantially underperforming analysts' expectations of 0.3% growth.
Many economists fear the US economy will go into recession as the impact of tariffs flows through to consumer prices.
Some analysts said US companies had rushed to import goods in the March quarter before US reciprocal tariffs came into effect.
President Trump announced higher-than-expected reciprocal tariffs for many trading partners on 2 April.
Which ASX tech shares outperformed last week?
It was a case of the large-cap ASX tech companies pulling the index higher last week.
WiseTech Global Ltd (ASX: WTC) shares rose 9.73% to finish at $95 apiece on Friday.
The Xero Ltd (ASX: XRO) share price rose 8.73% to $170.25.
TechnologyOne Ltd (ASX: TNE) shares ripped 11.41% to close the week at $31.25 apiece.
NextDC Ltd (ASX: NXT) shares soared 12.86% to $12.55 apiece.
ASX tech sector darling Life360 Inc (ASX: 360) had a great week with the share price ascending 12.05% to $22.96.
The Megaport Ltd (ASX: MP1) share price surged 10.4% to finish the week at $11.57.
Objective Corporation Ltd (ASX: OCL) shares rose by 10.72% to $16.42 per share.
ASX 200 market sector snapshot
Here's how the 11 market sectors stacked up last week, according to CommSec data.
Over the five trading days:
| S&P/ASX 200 market sector | Change last week |
| Information Technology (ASX: XIJ) | 9.55% |
| A-REIT (ASX: XPJ) | 5.74% |
| Healthcare (ASX: XHJ) | 5.29% |
| Consumer Discretionary (ASX: XDJ) | 4.85% |
| Energy (ASX: XEJ) | 4.18% |
| Utilities (ASX: XUJ) | 3.39% |
| Financials (ASX: XFJ) | 3.3% |
| Consumer Staples (ASX: XSJ) | 3.3% |
| Communication (ASX: XTJ) | 3.13% |
| Industrials (ASX: XNJ) | 2.62% |
| Materials (ASX: XMJ) | 0.47% |
