Yesterday, the S&P/ASX 200 Info Tech (ASX: XIJ) was the worst-performing index, slumping by more than 4% compared to the S&P/ASX 200 Index (ASX: XJO) that surged in the afternoon to finish 0.86% higher.
High profile ASX 200 growth shares across the board struggled to find headway amid the selloff.
At the larger end of town, big losses came from the Domino's Pizza Enterprises Ltd (ASX: DMP) share price, which slumped 8.50% to give back all its reporting season gains, the Afterpay Ltd (ASX: APT) share price fell 7.20% and Seek Limited (ASX: SEK) is now down for the year after falling 7.10%.
Elsewhere, big winners from last year, including Lynas Rare Earths Ltd (ASX: LYC), Temple & Webster Group Ltd (ASX: TPW) and JB Hi-Fi Limited (ASX: JBH), also gave up substantial gains.
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Trigger for yesterday's selloff
One thing that could be the catalyst for a tech and growth-driven selloff is rising bond yields.
In the United States, the 10-year treasury yield is often regarded as the risk-free rate, given the US government has never defaulted on its debt obligations. The 10-year treasury yield previously took a nosedive from 1.95% to 0.40% between December 2019 to March 2020.
In more recent months, treasury yields have been on a tear, soaring from lows of 0.50% in August 2020 to 1.36% this month.
Higher yields signal higher borrowing costs and inflation, which could negatively affect businesses and share market performance.
The shares that led the market higher when interest rates were plummeting are now the ones most vulnerable as interest rates rise.
Conversely, value sectors, including financials, utilities, real estate and commodities, can often withstand or benefit from higher interest rates.
This was evidenced by the 0.86% increase in the ASX 200 yesterday, with the big four banks, miners, oil and REITs doing the heavy lifting.
US tech shares rebound before close
The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) found itself down as much as 4% last night but managed to rebound in the last few hours of trade to close 0.96% higher.
ASX 200 tech shares have struggled to follow the Nasdaq for a rebound, with the S&P/ASX Information Technology index experiencing two consecutive red days, down 1.98% at the time of writing.
