All eyes will be on the US tech giants when the US stock markets open later today. Friday’s sell off in some of the US’s biggest tech names was sharp and severe on Friday. But was this just a bit of profit taking after a note from Goldman Sachs (NYSE:GS) questioned the $600bn increase in some tech firms’ market cap in the past year? This is an important question that we need answered as tech stock weakness is having an impact on other growth assets today. The MSCI (NYSE:EEM) emerging markets index fell on Friday, yet the Aussie dollar, which is correlated with growth assets, was relatively stable on Monday.
Essentially, nothing fundamental has changed for the big US tech giants like Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOGL). Interestingly, we pointed out that Google was lagging the other Silicon Valley giants in the tech rally, and it managed to have a softer sell off on Friday, down 3%, compared to nearly 4% for Apple. This theme may continue, and it’s worth watching to see if Google can have a softer sell off compared to other tech giants in the days ahead.
A second session of hefty losses for the Nasdaq and US tech sector could spook the markets this week, so if we don’t get a recovery then we may see a broader decline in growth assets. On Friday, there was a sign of money being pulled out of the tech sector and put into energy and financials, which does not suggest that investors are getting defensive and looking for a broad risk sell off quite yet.
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