Düsseldorf The sell-off in stock markets is hitting even the largest companies with full force. Tech giants like Apple, Microsoft and Amazon have lost more than $1 trillion in market value over the past three trading days, according to data from financial service Bloomberg.
“We are seeing a sell-off across all asset classes. You see that relatively seldom and it is a typical sign of a crisis,” explains Volker Brühl, Managing Director of the Center for Financial Studies at Frankfurt’s Goethe University. “Currently everyone is trying to take profits while there are still profits.” Since there is not enough demand to counteract this, prices are falling.
This behavior is currently particularly pronounced in the large technology groups. The market capitalization of the ten largest companies in the US tech index Nasdaq 100 has shrunk by almost 1.1 trillion dollars since the close of trading last Wednesday. The biggest loser is the iPhone producer Apple, which lost 226 billion dollars in value. The group is now on the verge of being replaced by the Saudi oil company Saudi Aramco as the most expensive company in the world.
The software developer Microsoft made the biggest losses after Apple with 190 billion dollars. The third biggest loser was the online retailer Amazon with a minus of 174 billion dollars, followed by the electric car manufacturer Tesla with a loss of 171 billion dollars and the Google-Mutter Alphabet with 127 billion.
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The entire Nasdaq 100 lost around $1.5 trillion in value in three days. That’s more than all German companies Leading index Dax are worth 40 together.
And there could be more downside, said economist Diana Mousina of asset manager AMP Investments, as markets worry there could be a significant economic slowdown or a “hard landing” from aggressive rate hikes.
The tech index has been in correction mode since last Thursday, after the US Federal Reserve raised interest rates by half a percentage point and Fed Chair Jerome Powell signaled interest rates would continue to rise at a similar pace to keep inflation in check to fight the United States. Investors worry that the Fed will stall the economy as a result.
Rising interest rates are primarily weighing on the valuation of tech stocks, which are typically growth companies. Because rising interest rates increase financing costs and discount future profits in the analysts’ valuation models. Since the interest rate hike, the Nasdaq 100 has fallen by up to 10 percent.
However, the correction is also reducing the previously high valuations of the shares, explains fund manager Matt Moberg from Franklin Templeton: “The prices of some tech companies are falling significantly, although the fundamental data remain good, as Microsoft has shown, for example. This also makes valuations more attractive in some cases.”
Accordingly, the first investors use the correction to re-enter. The Nasdaq 100 rose more than 2 percent in the first few hours of trading on Tuesday. However, investment strategist Solita Marcelli warned her clients in a note: “Right now, investors need to be prepared for continued volatility.”
More: Sell-off in stocks, bonds, gold and crypto: Investors in risk-off mode.
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