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What if the biggest opportunity in the market just flashed right in front of you? This week, when Trump announced a temporary ceasefire, the Australian tech sector didn’t just move, it exploded, surging more than +7% in a single day.
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In fact, over the past few weeks, the tech sector has already delivered double-digit gains. Now, if you’re wondering how that’s possible, given that tech is typically seen as a high-risk growth sector that struggles when oil prices rise, and global uncertainty builds, it might be time to rethink that view.
So, here’s the real question: Despite what history would suggest, is the surge the clearest signal yet that the tech sector is gearing up for a major rebound?
Let’s step back for a second. Tech has been smashed, down nearly 50% in just six months. Sentiment has been weak, confidence was shaken, and investors have been sitting on the sidelines waiting for clarity, but here’s how trading markets really work. They don’t wait for clarity; they move before it.
Weeks before the war, the stock prices of the tech companies were already telling a story. Selling pressure was fading, and key levels were holding. Buyers were quietly stepping in while everyone else was still focused on the headlines. However, this is where it gets even more interesting.
Why does a ceasefire matter so much to tech? The answer is because it changes the entire macro picture in an instant. Less geopolitical tension means less oil pressure. Lower oil prices ease inflation, and softer inflation opens the door to more stable interest rates. Tech stocks thrive in this environment.
Just look back through history, and you will see oil and tech move in opposite directions. When oil surges, tech gets crushed under inflation and rising rates. When oil cools, tech stocks come back to life.
So, if oil stabilises from here, that raises the biggest question of all. Has the bottom for Australian tech stocks already been set, even as most investors are still waiting for confirmation? The answer may well just be in this week’s buying power, and if April last year taught us anything, it’s this.
When the technology sector turns after a deep sell-off based on external factors, it doesn’t crawl higher; it sprints higher. Good luck and good trading.
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Dale Gillham is Chief Analyst at Wealth Within and an international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au.
Disclaimer: While Wealth Within holds an Australian Financial Services License (AFSL:226347), the information featured in this program is general in nature and therefore should not be relied upon. Before making any investment decisions, you should consult a licensed professional who can advise whether your investment decisions are appropriate for you.
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