ASX 200 tech shares deep in the red today. Here’s why

S&P/ASX 200 Index (ASX: XJO) tech shares are having a tough time of it today.

While the benchmark index itself is down 0.84%, the S&P/ASX All Technology Index (ASX: XTX) – which contains some smaller tech stocks outside of the ASX 200 – is down a painful 2.84% at this same time.

Here’s how some of the top ASX 200 tech shares are faring in early afternoon trade:

• Buy now, pay later (BNPL) stock Block Inc (ASX: SQ2) shares are down 2.9%
• WiseTech Global Ltd (ASX: WTC), a provider of cloud-based software solutions for the logistics sector, is down 4.33%
• Administration services company Link Administration Holdings Ltd (ASX: LNK) shares are down 2.3%
• Accounting software provider Xero Ltd (ASX: XRO) shares are down 2.16%

So, what’s going on?

Why are ASX 200 tech shares feeling the heat today?

ASX 200 tech shares look to be under pressure following a big sell-off in technology stocks in US markets overnight. That saw the Nasdaq Composite Index close down 2%.

Block, which acquired Afterpay in January, is dual listed on the ASX and NYSE, and its US shares closed down 2.9% overnight.

Investors appear to be locking in some of the gains posted by the tech sector in October and November, which saw the ASX All Tech Index charge 12% higher over the two months.

There are also likely some jitters about the prospects of further interest rate rises ahead from the US Federal Reserve when its members meet again next week.

And then there’s yesterday’s 0.25% interest rate increase from the Reserve Bank of Australia. While the move wasn’t entirely unexpected, some analysts had forecast the central bank might pause its tightening path to assess the impacts of the past seven months of rate rises.

ASX 200 tech shares broadly sold off in the minutes after the RBA announcement.

Below you can see how the big tech stocks — Block, Xero, WiseTech, and Link — have been tracking longer term.

The post ASX 200 tech shares deep in the red today. Here’s why appeared first on The Motley Fool Australia.

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More reading

• 10 ASX shares to buy in 2023
• Why Beach, Block, Magellan, and St Barbara shares are dropping
• Why is the Xero share price being trashed on Tuesday?
• Buy Xero and this ASX growth share for 2023: analysts
• Here are the 10 most shorted ASX shares

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Link Administration, WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Block, WiseTech Global, and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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