Dusseldorf The sell-off in equity markets is hitting even the largest companies hard. Tech giants like Apple, Microsoft and Amazon have lost a total of more than $ 1 trillion in market value over the past three trading days, according to data from Bloomberg financial service.
“We are seeing a sell-off across all asset classes. It is seen relatively infrequently and is a typical sign of crisis, “explains Volker Brühl, managing director of the Center for Financial Studies at Goethe University in Frankfurt.” Currently everyone is looking to take profits while there are still profits. ” ‘is enough demand to counter this, prices are going down.
This behavior is currently particularly pronounced in large technology groups. The market capitalization of the ten largest companies in the US Nasdaq 100 technology index has shrunk by nearly $ 1.1 trillion since the close of trading last Wednesday. The biggest loser is iPhone maker Apple, which has lost $ 226 billion in value. The group is now on the verge of being replaced by Saudi oil company Saudi Aramco as the most expensive company in the world.
Software developer Microsoft made the biggest losses after Apple with $ 190 billion. The third biggest loser was online retailer Amazon with under $ 174 billion, followed by electric car maker Tesla with a loss of $ 171 billion and Google’s mother Alphabet with $ 127 billion.
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The entire Nasdaq 100 lost about $ 1.5 trillion in value in three days. That’s more than all the companies in the main German index, the Dax 40, are worth together.
And there could be other downsides, said economist Diana Mousina of asset manager AMP Investments, as markets fear 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 Chairman Jerome Powell signaled that interest rates will continue to rise at a similar pace. to keep inflation under control to fight the United States. Investors fear that the Fed will freeze the economy as a result.
Rising interest rates weigh primarily on the valuation of technology stocks, which are typically growth companies. Because rising interest rates increase financing costs and discount future profits in analyst valuation models. Since the rise in interest rates, the Nasdaq 100 has dropped as much as 10%.
However, the correction is also reducing previously high stock valuations, explains fund manager Matt Moberg of Franklin Templeton: “The prices of some tech companies are falling significantly, although fundamental data remains good, as demonstrated for example. Microsoft. This also makes valuations more attractive in some cases. “
Consequently, early investors use the correction to re-enter. The Nasdaq 100 was up more than 2% in the early trading hours on Tuesday. However, investment strategist Solita Marcelli warned clients of her in a note: “For now, investors need to be prepared for continued volatility.”
Moreover: Sale of stocks, bonds, gold and cryptocurrencies: investors in risk-off mode.