Tech stocks rally in face of trade tensions
In the wake of Transatlantic trade tensions between the US, EU, Canada and Mexico we’ve seen shares of companies known as Faangs rally to fresh heights.
On Friday, the NYSE Fang+ index rose by 2.5%, which took the year to date gain up to 26% as investors look on nervously as the EU, Canada and Mexico made preparations to respond to US President Donald Trump’s new tariffs on imports of aluminium and steel.
Faang, the name originally given to the group that includes Facebook, Amazon, Alphabet (formerly known as Google) and Netflix, has benefited from investors looking to move into a tried and tested markets while the trade tariff situation sorts itself out.
Included in Faang today is Apple who, along with Amazon, Netflix and Facebook, closed with record highs on Friday.
The performance of the tech giants this past week is in sharp contrast to the S&P 500, which is up by just a shade over 2% this year, while the tech-laden Nasdaq Composite is up 9.4% this year.
The feelings of State Street Global Advisors chief investment strategist Michael Arone and TD Ameritrade chief market strategist JJ Kinahan are that certain sectors are more prone to suffering from trade tensions than others and that the impact on industrials and sectors such as steel makes it hard for investors to read the market.
It’s believed that tech is the safest option, for now at least.
“The feeling is let’s go with what is working, and what has been working is Faangs,” Mr Arone commented.
This signals a welcome turnaround for tech after the sell-off in March when privacy concerns were an issue for many stockholders. It was believed that regulators could step in and even force some of the more powerful companies to break up, but now this seems to be playing second fiddle in the mind of investors and strategists alike with the trade situation seemingly no nearer a conclusion, with all sides looking at though they’re digging their heels in.
Friday also saw UBS analysts raise the price target on Apple shares from $190 to $210.
All in all, things are looking good for tech investors for the foreseeable future.