Markets nervy as traders fear tech stock “froth”

MARKETS had a nervy start to the week with optimism from the easing of lockdown and the unclogging of the Suez Canal tempered by fears of frothy activity.

The fallout from the Archegos US hedge fund is bound to hit banks, but so far no one is sure how badly. The trimming of the Deliveroo share price might be merely sensible, but it slightly adds to concern that bubbles intech shares might go pop any time.

Michael Hewson at CMC Markets said: “While it can be claimed that what happened on Friday was highly unusual, what about anything that has happened over the past few years is normal? We have hundreds of companies trading at valuations that bear little, if any relation to their underlying fundamentals.”

Calmer heads say while there are highly unusual trading patterns in certain stocks, GameStop being the most obvious example, they are particular rather then a sign of more general hysteria.

Archegos looks bad, but it seems unlikely to be systemic,say traders still talking the market up, at least while they remain long Tesla.

Oil prices fell as the contained ship that was choking the Suez Canal was re-floated. The Ever Given was blocking one of the world’s busiest trade routes, holding up £7 billion of goods each day and risking a shortage, if you believe the fruitier tabloids, of vitals such as toilet paper.

Brent Crude fell 45 cents to $64.12, down from $70 a barrel earlier this month.

The FTSE 100 was sheepish, losing 27 to 6713.  Glencore was the worst hit, down 8p at 278p.BA owner IAG lost 4p to 192p.

UK banks mostly held their own, with talk of rising mortgage prices – and therefore profit margins – distracting from wider fears.

Hargreaves Lansdown, the share broker that has boomed thanks to new investors piling into tech, rose 21p to 1543p.

Peel Hunt was pushing retail stocks, due a lockdown lift. Next,which reports on Thursday, is worth 8500p a share says the broker. They fell 36p to 7926p today.