Tech stocks take a breather but COVID-19 could see a second wave of rises, Materials rise again and… investors should have patience

By Jonathan Jackson. Published at Jul 31, 2020, in Features

Going against the trend of the last six months, tech stocks took a breath this week.

The surge, as it was, came to a halt. Not a shuddering one, because if the mad history of 2020 tells us anything, we could see more gains for tech stocks as COVID-19 trends once again accelerate.

The rise of tech stocks this year, has been a defining feature of the stock market since the COVID-19 pandemic began.

According to eToro’s Adam Vitesse, the logic behind this is clear: “firms that deliver services digitally, or can enable workers to do their jobs remotely, stand to benefit from a crisis that pushes consumers and companies towards living virtually.”

Intriguingly, Vitesse notes that the tech stock rally paused just as Covid-19 cases in the US once again soared.

The answer behind why tech stocks have taken pause appears to be a relatively simple one; “investors have hit a wall in terms of the valuations they are comfortable with. Amazon’s share price is up by more than 60% year-to-date, while Netflix has added close to 50%,” Vitesse says.

There is one Aussie small cap to watch in this mess.

OneView Health (ASX:ONE) has been rolling out its cloud based software to hospitals during this COVID mess.

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