US Open – Tech Finding its Feet

Investors Shrug Off Vaccine News

Tech stocks enjoying some reprieve on Wednesday after taking another beating on the first trading day of the US week, taking the Nasdaq into correction territory.

The correction has been rapid and, arguably, coming given the extraordinary year they’ve had. Whether you’re talking about the 83% rise from pandemic low in March to the peak a week ago or the more modest 27% rise from pre to post pandemic peaks, it really has been a remarkable year for tech.

The world has changed a lot in a very short period of time and tech has undoubtedly been best placed to reap the rewards but the big problem is valuing a sector like this in the midst of the pandemic. The world will not return to what it was in February and it won’t continue as it is now. And the void in between these two realities is vast, which makes valuing these firms more difficult than ever.

Add to this the FOMO behaviour that accompanies anything that rises as rapidly as these stocks have, not to mention the “Nasdaq whale” which was revealed to be none other than Softbank this week and we’re looking at a market that was covered in froth. At what point do these stocks start to represent value again? I can’t imagine we’re too far away from investors interests being piqued.

AstraZeneca/Oxford University setback shrugged off

The overnight news on the AstraZeneca/Oxford University vaccine could have caused a stir in these markets but investors appear to have taken it for what it currently is, a minor setback that may quickly resolved. Of course, that depends on the results of the investigation into the adverse reaction experienced by one volunteer.

Granted, these markets have been very reactive to vaccine developments over the months so it’s perhaps surprising just how easily this has been shrugged off. That said, good news is more powerful than bad, particularly when there’s so many vaccine candidates out there. And as I’ve already said, this is still only a temporary setback. If it turns out to be worse than that, maybe it will knock sentiment a little. Even AstraZeneca is only 1.45% lower.

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Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam