Tech stocks fell again as the prospect of a faster rate hike from the Federal Reserve caused panic in markets.
The Nasdaq Composite Index on Wall Street, which is dominated by tech giants, fell more than 2% early in the session amid concerns that some stock prices were inflated by the influx of new printed funds during the pandemic.
The prospect of turning off the tap of cheap money prompted traders to trade growth stocks for safer alternatives, triggering the rout.
Tech wreck: The Nasdaq Composite Index on Wall Street fell nearly 2% amid concerns that some stock prices were inflated by the influx of new funds printed during the pandemic
This was bad news for some UK savers, as investment trusts with large stakes in US tech companies took a heavy hit in London.
Scottish Mortgage Investment Trust fell 4.9%, or 58.5p, to 1139p, while Baillie Gifford US Growth Trust fell 4.5%, or 12p, to 256.5p and Allianz Technology Trust fell 5 , 7%, or 18.5p, to 305p.
The massive selloff meant the Nasdaq was down nearly 10% from its all-time high reached in November, placing it near a key threshold indicating a market correction.
A correction is a fall in the value of a stock or other asset by 10% or more from its most recent high.
Stock Watch – Avacta
Diagnostic company Avacta has lost more than a quarter of its value after suspending sales of its Affi DX Covid-19 test.
Laboratory analysis showed the test to be less effective at detecting the Omicron variant in low viral loads compared to other variants of the virus, the company said.
Avacta has stopped sales as it replaces the antibodies used in Affi DX to boost its effectiveness. He did not give a date for the resumption of sales.
Stocks plunged 33.6%, or 39p, to 77p.
Nervousness on Wall Street also hit the FTSE 100, which fell 0.5%, or 40.03 points, to 7,445.25, while the mid-cap FTSE 250 was down 1.5%, or 351.44 points, at 23001.81.
The Hut Group’s shares have been roughed up after it handed documents to regulators allegedly showing a plot to lower its share price.
Shares of the online shopping specialist fell 7.7%, or 14.9p, to 179.5p after reports over the weekend said the company provided data to the Financial Conduct Authority (FCA) regarding what she described as irregular trading in her shares.
Although it floated with great fanfare in September 2020, THG stock has lost nearly two-thirds in value due to concerns about the company’s potential as well as the influence of founder Matt Molding.
However, the company alleged that the fall in the share price was instead part of a coordinated mass-selling plan designed to lower its value, according to the Sunday Times.
Despite the steep drop, analysts at Liberum were bullish, noting THG shares to “buy” with a target price of 750p.
The broker said the fundamentals of the company “had not changed” since its IPO and that the decline in the share price was “excessive”.
Foreign exchange group Wise fell to an all-time low after Citigroup analysts asked their clients to get rid of the shares.
In a note, the bank downgraded its rating from “neutral” to “sell” and lowered its price target to 650p from 1030p, saying the stocks were trading on “excessive long-term growth expectations.”
The valuation took Wise shares down 10.7%, or 72.4 pence, to 606.4 pence during the session. Bank stocks climbed on hopes of further interest rate hikes, with HSBC up 2%, or 9.7p, to 492p while Barclays surged 1.3%, or 2.65p, to 207.9p and NatWest increased 0.2%, or 0.5p, to 247p.
Hikma Pharma has launched a business focused on ready-to-use injectable drugs for the US healthcare market. Called Hikma 503B, it aims to strengthen the company’s position as a leading supplier of injectable drugs to US hospitals and will operate from a facility in New Jersey. Shares were down 1.5%, or 31p, to 2103p.
Elsewhere, Nightcap, owner of the London Cocktail Club bar chain, topped off with a sharp increase in sales in the second half of 2021.
Sales for the 26 weeks through December 26 were £ 15.5million, 46.2% ahead of pre-pandemic levels, while around 70% of the 7,500 canceled reservations during the holiday season had been rescheduled for the first three months of 2022. Shares jumped 5.1 percent, or 1p, to 20.5p.
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