By Jack Denton
The selloff in technology stocks hit the London market on Tuesday, with the sector dragging down the U.K.’s benchmark index as investors exit companies that have been among the biggest winners through the COVID-19 pandemic.
Shares in tech companies listed on the FTSE 100, the index of London’s top stocks by market capitalization, broadly fell, with information technology group AVEVA /zigman2/quotes/202038414/delayed UK:AVV 0.00% , high tech grocer and robotics logistics specialist Ocado /zigman2/quotes/207225647/delayed UK:OCDO -0.43% , cybersecurity group Avast /zigman2/quotes/203787462/delayed UK:AVST +0.62% , and enterprise software company Sage /zigman2/quotes/204528931/delayed UK:SGE -0.81% all falling.
Leading the charge down was Scottish Mortgage Investment Trust /zigman2/quotes/204858474/delayed UK:SMT -1.62% , the publicly traded trust run by the Edinburgh-based fund manager Baillie Gifford. Shares in the trust fell more than 11% before paring losses and settling around 6% lower.
Scottish Mortgage includes Chinese tech giants Tencent /zigman2/quotes/204605823/delayed HK:700 +0.20% and Alibaba /zigman2/quotes/201948298/composite BABA -0.11% , electric-vehicle manufacturers Tesla /zigman2/quotes/203558040/composite TSLA +4.68% and NIO /zigman2/quotes/204905836/composite NIO +1.39% , food delivery player Delivery Hero /zigman2/quotes/208380525/delayed XE:DHER +0.60% , Dutch semiconductor heavyweight ASML /zigman2/quotes/206208657/delayed NL:ASML +0.80% , and e-commerce megacap Amazon /zigman2/quotes/210331248/composite AMZN +2.07% in its top 10 holdings. Shares in all of these major constituents in the fund have recently fallen.
“Tech-heavy investment trust Scottish Mortgage has fallen by more than 12% in just over a week and was among the FTSE 100’s worst performers on Tuesday along with other tech names Ocado and Avast,” said Russ Mould, an analyst at AJ Bell.
The tech-heavy U.S. Nasdaq index /zigman2/quotes/210598365/realtime COMP +2.09% fell around 2.5% on Monday, as investors sold off shares late in the day. The Nasdaq looked set for another day of losses, with futures /zigman2/quotes/210598365/realtime COMP +2.09% pointing down around 1.8% in the premarket.
Tech stocks have seen a mighty surge in the last year, shining as one of a few sectors to benefit from the social and economic shift that has come with the COVID-19 pandemic.
“However, the FTSE 100 index managed to squeeze out small gains thanks to strength among names that should benefit from a reopening of the UK and global economy,” Mould added.
The FTSE 100 was just below flat in wider London trading after opening higher. U.K. stocks performed better than most indexes in Europe, buoyed by strength in the travel and leisure sector on optimism over the economic recovery from the pandemic.
The U.K. is among the world’s leaders in COVID-19 vaccinations, and Prime Minister Boris Johnson on Monday set a tentative early date of Jun. 21 for all social restrictions to be lifted. Domestic holidays could become possible by mid-April.
“Travel and leisure stocks are getting a lift this morning after yesterday’s announcement of a reopening schedule in the U.K. prompted a surge in holiday bookings,” said Michael Hewson, an analyst at CMC Markets.
Shares in British Airways owner IAG /zigman2/quotes/208070069/delayed UK:IAG -0.51% jumped near 7% before paring gains to settle 4% higher. London-listed low-cost carriers also took off, with easyJet /zigman2/quotes/202825892/delayed UK:EZJ +0.77% stock flying near 9% higher and shares in Ryanair up 3%. Optimism spread to the aircraft-manufacturing sector, with shares in engineer Rolls-Royce /zigman2/quotes/203646520/delayed UK:RR +0.29% rising 5%.
Hotel, pub, and restaurant stocks also got a boost. Shares in InterContinental Hotels Group /zigman2/quotes/202865596/delayed UK:IHG +0.86% , restaurant and hotels company Whitbread /zigman2/quotes/207954631/delayed UK:WTB +0.79% , and restaurant and pub operator Marston’s /zigman2/quotes/203821737/delayed UK:MARS +2.38% all lifted.
London-listed major oil companies BP /zigman2/quotes/202286639/delayed UK:BP +0.70% and Royal Dutch Shell also rose as crude prices remain at 13-month highs. Benchmark Brent was more than 0.5% higher, trading at around $65.60 a barrel.
HSBC /zigman2/quotes/208272822/composite HSBC +0.33% was a major faller outside of the tech sector on Tuesday, with shares in the global banking giant down 2% after posting a 34% fall in profits through 2020.