© Reuters. Omicron could make Megacap Tech even more expensive
(Bloomberg) – Megacap tech stocks are already expensive, but the Omicron coronavirus strain could make them even more expensive given their defensive properties.
Strategists say the group has the potential to outperform from here as expectations for rate hikes are rolled back and focus shifts to stocks that may prove shockproof. The tech heavy, home to the likes of Apple Inc (NASDAQ :). and Microsoft Corporation (NASDAQ :)., Opened 1.5% higher on Monday, outshining that after the brutal sell-off on Friday.
Elsewhere, China's high-growth Chinext index rose 1% on Monday, although Asian stocks by and large prolonged losses. China's Covid Zero strategy seems to be proving to be a boon for the meter dominated by tech and healthcare companies.
"I think big tech is the new defensive with strong all-weather growth and fortress balance sheets, and given that, their valuations are undemanding," said Ben Laidler, global markets strategist at eToro.
Recent history supports this theory. Since the delta variant was introduced in late May, the NYFANG + index has risen 16% and outperformed the S&P 500 by 9% compared to 21 times for the broader benchmark. Tesla (NASDAQ 🙂 Inc. and Nvidia (NASDAQ 🙂 Corp. scan as the most expensive stocks.
Falling US bond yields also bode well, but given the uncertainties surrounding Omikron and sky-high valuations, a rally is not a given.
"Given the foamy mood, expanded valuations, tightening monetary policy and the accumulation of bad Covid news … a market sell-off seems logical." City group Inc (NYSE :). Strategist Robert Buckland wrote in a note.
Still, Buckland recommends buying the dip, as does Wedbush Securities Inc. technology analyst Daniel Ives, who sees "a clear buy opportunity given our optimistic view of the technology sector through 2022".
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Meituan shares tumbled after an antitrust investigation, investment surge and increasing competition Alibaba (NYSE 🙂 group resulted in a bigger loss
China's Covid Zero strategy appears to be proving to be a boon for its stocks as global markets fret over the Omicron coronavirus strain
Chip production in the EU should double by 2030, with Intel (NASDAQ 🙂 soon to reveal details on a large investment in the region
(Price update in the second paragraph)
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