Outlook of Technology Sector 2019

Team Veye | 13-Jan-2019 Outlook of Technology Sector

Following a massive rally on Wall Street and European markets as we stepped into 2019, the Australian shares have also rebounded from the negative volatility. And, it appears that Technology remained the best performing sector, driven up by stocks like Wisetech Global (up 5.3%) & Afterpay (up 6.8%). Most sectors traded higher, with resources (up 2.5%) and energy (up 2.4%) being the next strongest performers.

The ASX200 Index recovered 5.61% during the last 3 weeks starting at 5,467pts on 21st Dec’18 and closing at 5,774pts on 11th Jan’18.  Technology stocks have seen solid gains even in US, since tumbling to a 15-month low late last month, but investors aren’t convinced that that low represents a bottom for the sector, which has been volatile amid questions  over growth and valuation. The US S&P 500 information technology index went up 10% since the close of trading on 24th Dec’18, when it ended at its lowest since Sep’17. Technology stocks have seen solid gains since tumbling to a 15-month low late last month, but investors aren’t convinced that that low represents a bottom for the sector, which has been volatile amid questions over growth and valuation. 

Investors remained shocked & concerned at how bad fourth-quarter performance was in tech. The markets saw a lot of panic selling that is believed to be based on how quickly the stocks were going down. Prominent venture capitalist Fred Wilson while offering his predictions for 2019 a day before Apple's announcement, included a word of warning on China and the ongoing trade tensions with the U.S. stated that any significant trade concessions from China could impact its growth prospects in 2019 and beyond, which might take the most powerful engine of global growth off the table this year.

Concerns about China extend far beyond the tech industry, but with large and middle-tier tech companies needing to grow to meet investor expectations, a slowdown originating in the world's second-largest economy poses a particular threat.

Our analysts reckon that the technology sector may see some volatility, before stabilizing later during the year. And with the markets now recovering, a lot of tech stocks especially Software and Artificial Intelligence that are under-valued could be your best bet. Some of these include ASX technology stocks like Livetiles, Wisetech, Afterpay Touch, Bravura Solutions and Technology One.   


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