Why are ASX 200 tech shares being fried on Friday?

It’s been another rough day for the S&P/ASX 200 Index (ASX: XJO) so far this Friday. At the time of writing, the ASX 200 is down by a painful 0.52%, pulling the index down to under 7,170 points. But it’s ASX 200 tech shares that are really feeling the pain today.

Tech shares are getting fried up this Friday, no way around it. Tech is one of the worst-performing ASX 200 sectors on the market today, only trailing ASX gold shares in losses.

Take the Block Inc (ASX: SQ2) share price. Block shares are presently down by a nasty 5.82% at $96.94 a share. Xero Limited (ASX: XRO) has slipped by 2.54% to $73.90 each, while Altium Limited (ASX: ALU) shares have lost 3% of their value to $36.46 a share. Appen Ltd (ASX: APX) has fallen by a depressing 4% to $2.52.

So why is the tech space getting singled out for some of the worst ASX 200 losses this Friday?

Why are ASX 200 tech shares getting fried up this Friday?

Well, it’s not entirely clear. But it is likely that what is happening over on the US markets is to blame here. The US markets have been roiled this week by the US Federal Reserve’s decision to raise interest rates by 0.5%.

Further, Fed chair Jay Powell made some hawkish comments that indicated that the Fed is far from finding an interest rate ceiling.

This decision, and accompanying comments from Powell, saw the US market tank, particularly the tech-heavy NASDAQ 100 Index.

Higher interest rates are especially damaging for tech shares since many are priced on their future growth prospects, rather than their present profitability.

In last night’s trading session, the NASDAQ crashed by a horrid 3.2%. So ASX tech shares were never going to have a rip-roaring kind of day today. That’s the most likely explanation as to why tech shares are having such a disappointing end to the trading week this Friday.

The post Why are ASX 200 tech shares being fried on Friday? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• Why Bank of Queensland, Block, Fletcher Building, and Newcrest are dropping today
• One ASX share I’ve been buying in preparation for the next bull market
• If I was 40 and had never invested, here’s how I’d aim to build a $500,000 ASX share portfolio
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Sebastian Bowen 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 Altium, Appen, Block, and Xero. The Motley Fool Australia has positions in and has recommended Block 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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