Tech slump puts Nasdaq into correction territory
Tech stocks tumbled again as the prospect of faster interest rate hikes from the Federal Reserve caused panic in the markets.
The Nasdaq composite index on Wall Street, which is dominated by tech behemoths, fell more than 2pc in early trading amid concerns some share prices have been inflated by the influx of new money printed during the pandemic.
The prospect of the cheap money tap being turned off caused traders to swap growth stocks for safer alternatives, triggering the rout.
It was bad news for some British savers as investment trusts with large holdings in US tech companies took a hammering in London.
Scottish Mortgage Investment Trust was down 4.9pc, or 58.5p, at 1139p, while Baillie Gifford US Growth Trust slumped 4.5pc, or 12p, to 256.5p and Allianz Technology Trust fell 5.7pc, or 18.5p, to 305p.
The sell-off meant the Nasdaq was down almost 10pc from its alltime high reached in November, putting it close to a key threshold indicating a market correction. A correction is a decline in the value of a stock or other asset of 10pc or more from its most recent peak.
The jitters on Wall Street also hit the FTSE 100, which dropped 0.5pc, or 40.03 points, to 7445.25, while the mid-cap FTSE 250 was down 1.5pc, or 351.44 points, at 23001.81.
Shares in The Hut Group took a battering after it handed over documents to regulators supposedly showing a plot to drive down its share price. Shares in the online shopping specialist sank 7.7pc, or 14.9p, to 179.5p after reports over the weekend said the firm had provided data to the Financial conduct Authority (FcA) related to what it said was irregular trading of its shares. Despite floating with much fanfare in September 2020, ThG’s stock has dropped by nearly two-thirds in value amid concerns about the potential of the business as well as the influence of its founder Matt Moulding.
however, the firm has alleged the share price plunge was instead part of a coordinated plan of mass selling designed to push down its value, according to The Sunday Times. Despite the sharp decline, analysts at Liberum were upbeat, rating ThG’s shares at ‘buy’ with a target price of 750p.
The broker said the fundamentals of the business ‘have not changed’ since its listing and that the share price decline was ‘excessive’.
currency exchange group Wise slumped to an all-time low after analysts at citigroup told their clients to dump the shares.
In a note, the bank downgraded their rating to ‘sell’ from ‘neutral’ and slashed their target price to 650p from 1030p, saying the shares were trading on ‘excessive longterm growth expectations’. The assessment caused Wise shares to tumble 10.7pc, or 72.4p, to 606.4p during the session. Banking shares climbed amid hopes of more interest rate increases, with HSBC up 2pc, or 9.7p, to 492p while Barclays jumped 1.3pc, or 2.65p, to 207.9p and NatWest ticked up 0.2pc, or 0.5p, to 247p.
Hikma Pharma launched a business focused on ready-to-use injectable medicines for the US healthcare market. called hikma 503B, it is aiming to build on the firm’s position as a leading supplier of injectable drugs to US hospitals and will operate out of a facility in New Jersey. Shares were down 1.5pc, or 31p, at 2103p.
elsewhere, Nightcap, owner of the London cocktail club bar chain, toasted a strong rise in sales in the second half of 2021.
Sales for the 26 weeks to December 26 were £15.5m, 46.2pc ahead of pre-pandemic levels, while around 70pc of the 7,500 bookings cancelled over the festive period had been rescheduled for the first three months of 2022. Shares jumped 5.1pc, or 1p, to 20.5p.