The massive selloff in tech stocks hit the London market on Tuesday, with the sector dragging the UK’s benchmark down as investors walk away from companies that have been among the biggest winners in the COVID-19 pandemic.
Shares of tech companies listed on the FTSE 100, the index of major London stocks by market capitalization, fell broadly, with IT group AVEVA AVV,
specialist in high-tech logistics and Ocado OCDO robotics,
Avast AVST cybersecurity group,
and enterprise software company Sage SGE,
The Scottish Mortgage Investment Trust SMT led the charge down,
the publicly traded trust managed by Edinburgh-based fund manager Baillie Gifford. Shares of the trust fell more than 11% before cutting losses and leveling off around 6%.
Scottish Mortgage includes Chinese tech giants Tencent 700,
and Alibaba BABA,
manufacturers of electric vehicles Tesla TSLA,
And NIO NIO,
food delivery man Delivery Hero DHER,
Dutch semiconductor ASML ASML,
and Amazon AMZN e-commerce megacap,
in its top 10 titles. The shares of all of the fund’s major constituents have recently fallen.
“Scottish Mortgage, a tech-intensive investment trust, fell over 12% in just over a week and was among the worst performers on the FTSE 100 on Tuesday along with other tech names Ocado and Avast,” said Russ Mold, analyst at AJ Bell.
The US technology-intensive COMP Nasdaq index,
fell about 2.5% on Monday as investors sold their shares late in the day. The Nasdaq looked set for another day of losses, with NQ00 futures,
pointing down around 1.8% in the pre-market.
Tech stocks have seen a big increase over the past year, shining as one of the few sectors to benefit from the social and economic change that has come with the COVID-19 pandemic.
Also read: The pandemic has accelerated trends that could add value to these stocks
“However, the FTSE 100 Index has managed to make small gains thanks to the strength of names that should benefit from a reopening of the UK and global economy,” added Mold.
The FTSE 100 was just below the dish in wider London exchanges after a higher open. UK stocks outperformed most European indices, supported by strength in the travel and leisure sector on optimism about the economic recovery from the pandemic.
The UK is among the world leaders in COVID-19 vaccination, and Prime Minister Boris Johnson on Monday set a tentative June 21 date for the lifting of all social restrictions. National holidays could become possible in mid-April.
“Travel and leisure values are gaining momentum this morning after yesterday’s announcement of a UK reopening schedule sparked an increase in holiday bookings,” said Michael Hewson, analyst at CMC Markets .
Plus: Airlines and travel stocks rise as UK sets lockdown exit plans
Shares in IAG IAG, owner of British Airways,
jumped nearly 7% before stopping gains to settle 4% higher. Low-cost airlines listed in London have also taken off, with easyJet EZJ,
shares up almost 9% and shares of Ryanair RYA,
up 3%. Optimism spread to the aircraft manufacturing industry, with actions in engineer Rolls-Royce RR,
Equities in hotels, pubs and restaurants were also boosted. Shares in InterContinental Hotels Group IHG,
catering and hotel company Whitbread WTB,
and MARS from Marston’s, restaurateur and pub
Main oil companies listed in London BP BP,
et Royal Dutch Shell RDSA,
also rose, with crude prices remaining at a 13-month high. Benchmark Brent BRN00,
was over 0.5% higher, trading at around $ 65.60 a barrel.
was a major drop outside the tech sector on Tuesday, with shares of the global banking giant down 2% after posting a 34% drop in profits through 2020.