Investors had a shock yesterday when a brutal sell-off in tech stocks caused a big wobble in global equities, with the tech-heavy US markets taking the worst hit. The FTSE 100’s 1.5% decline was nothing compared to the Nasdaq’s 5% slump because the UK market has very little tech exposure, says Russ Mould, investment director at AJ Bell.
“Friday saw the FTSE 100 barely move at 5,846 with investors still demonstrating an appetite for risk as the two sectors showing gains on the day were oil and mining. The worst performing FTSE sectors were the defensives ones which you’d normally expect investors to snap up when markets go through a bad patch, namely utilities and healthcare.
“Other European markets were also static on Friday, while Asia saw just over 1% losses. These relatively minor movements would suggest that investors aren’t in panic mode and that Thursday’s sell-off might just have been people locking in some of the stellar gains made on tech stocks this year.
“However, there remains a fragile backdrop with mixed economic data, ongoing concerns about rising unemployment and no sign yet of a coronavirus vaccine, meaning that the slightest bit of bad news on any of these factors could be enough to cause further volatility in the markets.
“In terms of notable stock movements on the UK market on Friday, housebuilders were out of favour with investors following an investigation into various sector constituents over the way leaseholds were sold.
“Next week sees a flurry of reporting activity including construction equipment group Ashtead issuing first-quarter figures.”