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