US technology stocks are the weakest since April 2020 US technology stocks are the weakest since April 2020 US technology stocks are the weakest since April 2020

US technology stocks are the weakest since April 2020

Equities 6 minutes to read
Peter Garnry

Head of Equity Strategy

Summary:  The Nasdaq 100 futures are continuing lower again today extending the pain for US technology and growth stocks. The interest rate outlook is changing with more investors beginning to factor in the inflation rate at a higher level due to elevated energy prices which will likely remain high due to the green transformation and low investment levels in the global energy sector for more than seven years. The Nasdaq 100 is now at its weakest level relative to its 200-day moving average since April 2020 and thus this part of the market is now at a key inflection point.

Greenflation is a new term that will cause pain

As we written multiple times in this year’s equity notes the interest rate sensitivity theme has kicked into gear lowering equity valuations among US technology stocks and even more so for the most speculative stocks. Our bubble stocks basket was down 11.4% this year as of Friday’s close and the Ark Innovation ETF, which is highly correlated to our bubble basket and the most liquid instrument to trade this pocket of the equity market, is down 10.8% and is down in today’s pre-market session.

Source: Saxo Group

While the transitory inflation narrative was prevailing throughout most of 2021, the Fed’s decision to abandon the expressing and recently in the FOMC Minutes sounding more nervous on inflation have caught the market by surprise. The interest rate outlook is changing and more market participants are beginning to warm to our thesis from early last year that inflation will not become transitory. Or it will due to base effects but the inflation level will stabilize at a higher level than what we have observed in the previous 25 years. The key underlying driver is the green transformation that is partly driving the current energy crisis and as Javier Blas at Bloomberg recently wrote in this great article Greenflation Is Very Real and, Sorry, It’s Not Transitory, even Isabel Schnabel of the ECB is recognizing that the green transformation will cause disruptions and higher prices on energy. This will feed through to households and businesses in ways we have not seen a long time.

If we then couple the green transformation with a) renewable energy that is currently not scalable enough to meet our energy demands, and b) very low investment levels in the global energy sector over a 7-year period then we have the recipe for elevated energy prices over a sustained period of time. If the market is finally waking up to this reality then equities will have to deal with not only higher prices but potentially also lower operating margins from higher input costs such as energy, metals and even worse labour.

Nasdaq 100 is the weakest since April 2020

The leading technology index in the world is the Nasdaq 100 and futures on this index are down 1.1% in today’s session pushing the index down to just 3.1% above its 200-day moving average. Nasdaq 100 futures have not been below this average since early April 2020 when equities came roaring back after the sharp selloff induced by pandemic fears. The current distance to the 200-day moving average is 3.1% which is the lowest since April 2020 and is a key inflection point. Either investors see these levels as a buying opportunity ahead of the earnings season or it becomes a self-induced negative spiral taking the index further down.

As we said last week, we believe many of these growth pockets could be bought before the earnings season with investors betting that many of these companies will continue to show blistering growth rates with many other parts of the equity market struggling to deliver growth due to supply constraints. The global supply constraints could in the short-term reduce some of the headwinds for growth stocks despite rising interest rates as investors will balance the higher interest rates (discount rate on future cash flows) against much higher growth at digital companies compared to the physical and capital intensive industries.


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.