ASX tech stocks tumble after Wall Street sell-off

Wall Street paved the way for a sharp decline in ASX tech stocks, as uncertainty around the omicron variant and US Federal Reserve’s tapering weighed.

The Nasdaq closed at session lows, down 1.9% and smack bang on its 50-day moving average. The decline was headlined by mega caps including Apple, Meta Platforms (Facebook), Alphabet, Amazon, Microsoft and Tesla which fell between 1.4% and 6.1%.

The apparent flight to safety drove a sharp decline in the 10-year Treasury note, falling at its fastest pace since the beginning of the pandemic last year. Bond yields fall as their prices rise.

Escalating inflationary pressures is forcing central banks to tighten monetary policy, threatening to reduce the liquidity and interest rate tailwinds that helped drive a wide range of assets.

Last week, Fed Chairman Jerome Powell indicated that the central bank is open to accelerating the elimination of its bond-buying program to combat inflation, despite the potential disruption of omicron. Powell said he expects the issue to be addressed at the Fed’s 14-15 December meeting.

The ASX tech sector led declines this noon, down 2.3%, far outpacing the 0.2% decline for the broader ASX 200.

Unsurprisingly, heavyweight tech names like Afterpay (ASX: APT), WiseTech Global (ASX: WTC), Xero (ASX: XRO), Altium (ASX: ALU) and NextDC ((ASX: NXT) are leading today’s selloff.

Smaller companies in sub-sectors like BNPL have also taken substantial losses with Zip (Z1P) tanking 9.9% and Sezzle (ASX: SZL) down 13%.

Ecommerce stocks like Kogan.com (ASX: KGN) and Redbubble (ASX: RBL) have both marked fresh 52-week lows.

The long-term earnings power of tech stocks has become more valuable during an era of near zero interest rates.

However, rampaging inflation might call for a new chapter of tightening monetary policy. While rate hikes might be months away, tech stocks appear to be pricing in the bad news.