The first trading week of 2024 has seen technology shares plummet in most stock markets, causing a wave of panic and sell-offs across the globe.
On the 7th of April, Asian markets, particularly China’s Shanghai Composite, saw a staggering 9.78% decrease in technology stocks. The Japanese market followed suit with a 6.86% decline. Europe’s FTSE and CAC 40 were also not spared, with declines of 8.42% and 6.17% respectively.
Notably, although the S&P 500 opened with moderate gains, its technology sector was soon to plunge, ultimately causing the index to sink by 4.87%. The tech-heavy NASDAQ also displayed similar behavior, dropping 7.35% overall.
Analysts traced the incident back to surging inflationary pressures, shrinking global demand, and an increase in crude oil prices. Over the past few days, the “fear” index — a measure of stock volatility — has also shown an unprecedented surge.
The situation was exacerbated further by news of a possible back-door tax deal between the US and China, stirring years of rivalry between the two superpowers. This added to the investor uncertainty and apprehension as markets opened for trading.
Although it may take weeks for the markets to recover from the plunge, analysts have predicted a bull-run in the mid-term, provided that the US-China trade war can be resolved in the near future.
This rather unpredictable turn of events in the stock market has affected smaller businesses in particular, as they struggle to keep their businesses afloat. Amidst the chaos, the question now is whether technology shares can catalyze a resurgence of economic growth in the years to come.
