The FANG+ Index was up 10% yesterday, enjoying its best day ever as tech stocks rebounded following a promise of Chinese intervention, with investors also processing the US Federal Reserve rate hike.
The index features the traditional FAANG stocks, Meta Platforms Inc (NASDAQ:FB), formerly Facebook, Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Netflix Inc (NASDAQ:NFLX) and Alphabet Inc (NASDAQ:GOOG), the parent company to Google.
It also actively trades five other tech growth stocks, Chinese companies Alibaba Group (NYSE:BABA) and Baidu.com (NASDAQ:BIDU), NVIDIA Corporation (NASDAQ:NVDA), Tesla Inc (NASDAQ:TSLA) and Twitter Inc (NYSE:TWTR).
According to Ipek Ozkardeskaya, a senior analyst at Swissquote, investors have reacted to the Fed rate hike, the first since 2018, in a “kneejerk” manner.
“The kneejerk reaction to the Fed decision hinted that investors won’t let go of their tech stocks just yet.”
She adds that tech and growth stocks are usually the most sensitive to changes in interest rates, but that “the idea that the reflation trade will mostly support the value names, and leave the technology stocks in the dark doesn’t necessarily hold.”
Positive sentiment returning to tech stocks echoed movements in Asia over the last two days, with the Chinese government earlier this week promising intervention to ease the regulatory crackdown and support property and technology stocks.
Ozkardeskaya adds the decision has the potential to be “a game, and a trend changer.”
Nasdaq’s Golden Dragon China index up 33% in a single session, with Chinese powerhouses such as Alibaba, JD.com and Didi surging 37%, 40% and 41% respectively, while Hong-Kong Sang Heng index, which features Alibaba and JD.com climbed 7% following a month of losses.
Tech stocks have taken somewhat of a beating so far this year as geopolitical tensions and the fallout from Covid take its toll on all markets.
The FANG+ Index down 18% in 2022, while tech-heavy Nasdaq, which features some of the FANG+ stocks, as well other giants in the sector such as Microsoft, is down nearly 2,500 points so far this year, which equates to a 15% drop.
iShares Russell 1000 growth ETF, which features Apple, Amazon, Google and Meta in its top 10 holdings mirrored the tech indices, also down 16% in the first three months of 2022.
The Scottish Mortgage Investment Trust, which has holdings in several tech companies mentioned was up today by 1.98% to 981p, although that has lost nearly a quarter of its value this year.