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Tech-tonic shift? ASX tech shares rally following Nasdaq's lead

Investors have taken the foot of the gas for energy shares and replaced it with tech companies today…

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Mitchell Lawler
Mitchell stumbled upon the concept of investing when in high school, devotedly urging his parents to put some money into a handful of technology companies with increasingly popular products among his demographic – many of which have gone on to great success. It wouldn’t be until 2017, some five years later, that Mitchell became an investor of his own money. Having studied and worked as a mechanical engineer in the building services industry, Mitchell takes a methodical and analytical approach to evaluating businesses. Rather than relying purely on numbers, Mitchell drills beyond a company’s metaphorical mantle to unearth obscure patterns or competitive advantages that would go otherwise unnoticed. His expertise resides within areas such as software, consumer goods, and building services equipment. However, his quest to find quality companies that set the industry standard and flex some degree of an impenetrable position has no limits – small cap to mega cap, cosmetics to healthcare – if it’s an exceptional business it’s on his radar.
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Key points
  • Tech is the best performing sector on the ASX today 
  • The shift in sentiment follows a weakening in oil prices overnight, prompting investors to reassess the beaten-down sector 
  • Companies such as Appen, Wisetech, Tyro Payments, and Block are all pushing higher 

After a sustained period of selling, ASX tech shares are beginning to give their tested shareholders some hope.

This follows a flood of green across technology stocks on Wall Street last night, leading to the biggest percentage gain in a single session for the S&P 500 since June 2020.

At present, information technology is the best performing sector on the ASX today. With not a single ASX tech share constituent in the red, the sector is up by more than 4%. Meanwhile, the broader S&P/ASX 200 Index (ASX: XJO) is up a lesser 1.09%.

happy teenager using iPhone

Image source: Getty Images

Are buyers beginning to sweep in?

There's no doubt about it, the past few months have been a difficult time for tech investors. The once-booming sector began to fall away as inflation fears entered the fray late last year. Since then, the situation has only worsened.

In turn, it is estimated that around 70% of US tech shares have fallen by more than 20% — entering a bear market. Even bleaker, approximately a third have sunk more than 50% from their recent highs. The rapid south trajectory has shown a lack of willing buyers.

Simultaneously, an energy shortage — that has only been amplified by the circumstances surrounding Russia — has led to a rejuvenation in sentiment towards oil and gas companies. As such, the performance of ASX tech shares and US tech shares has been the polar opposite of the energy sector, as shown in the chart below.

TradingView Chart

However, with oil prices retreating by 12.8% overnight to US$107.64, the market is deliberating over whether the impacts are starting to be overblown.

Which ASX tech shares are winning today?

Simply put, all of the tech names inside the ASX 200 are riding the wave higher today. Though, here are the five best performing shares in the sector on Thursday:

Notably, US-based digital payments giant Block Inc CDI (ASX: SQ2) is trading 7.8% higher after gaining 11.3% overnight.

Motley Fool contributor Mitchell Lawler owns Appen Ltd and Block, Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Appen Ltd, Block, Inc., Life360, Inc., Tyro Payments, and WiseTech Global. The Motley Fool Australia owns and has recommended Appen Ltd, Block, Inc., and WiseTech Global. The Motley Fool Australia has recommended Tyro Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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