The FTSE 100 made reasonable gains on Tuesday as the mood around global tech shares briefly improved, lifting overall market sentiment.
Technology shares, particularly in the US, have been under since the Federal Reserve outline plans for tapering their asset purchases. The tech-heavy NASDAQ is down 6% so far this year, but a late rally yesterday in US names such as Apple, Amazon and Meta spilled over into the morning session in London.
Facing heavy selling at the beginning of yesterday’s session, tech shares were bought into during the session to finish largely flat.
“In the US, the tech-heavy Nasdaq index is down nearly 6% year to date, but yesterday’s session saw investors start to buy on the dip meaning that losses earlier in the day were eventually clawed back by the market close,” said Russ Mould, investment director at AJ Bell.
“It might be too early to call the start of a proper recovery for tech as pre-market indicative prices show minimal gains in the Nasdaq on Tuesday. Investors are likely to be waiting for US inflation figures tomorrow before committing to any big trades on the market.”
Technology shares account for a significant proportion of US equity indices and drove a recovery in S&P 500 and Dow futures overnight.
The FTSE 100 was 0.56% at 7,486 at the time of writing on Tuesday morning.
Scottish Mortgage Investment Trust was the FTSE 100’s top riser due to their exposure to the US tech sector. The trust includes Tesla, NIO, NVIDIA and Tencent in their top ten holdings.
“Scottish Mortgage Investment Trust was among the other UK-listed technology-related stocks trying to push ahead on the markets on Tuesday. Its shares jumped 3% following recent weakness caused by concerns of how rising interest rates would affect valuations for fast-growth stocks, many of which populate Scottish Mortgage’s portfolio,’ said Russ Mould.
Dechra Pharmaceuticals was also among the risers on Tuesday as investors stepped in to buy up the beaten down stock that is already down 16% in 2022.
Darktrace was the top riser on the FTSE 250 after the company raised their profit guidance, which was well received given a backdrop of general optimism around tech.