Equities: Deutsche Bank expects US Tech to rebound following sell-off

An 11% fall in US technology stocks over three weeks, against a 6% gain for the rest of the S&P 500, has taken the sector’s relative performance to the bottom of a multi-year channel from which it has previously rebounded strongly. Following that sharp underperformance, Deutsche Bank’s US equity strategists have raised their view on the sector from neutral to positive. The change comes after a difficult October for the Nasdaq as concerns over AI-related capital expenditure weighed on the index. A recovery in US equity futures, meanwhile, points to an improvement in market sentiment.

US technology stocks receive strategist upgrade

"Equities were mixed, with the STOXX 600 (+2.0%) and the equal-weighted S&P 500 (+5.0%) gaining, but the Nasdaq (-5.3%) suffering its worst month since March 2025 as concerns around AI capex intensified. European credit and European banks also struggled as OAT-Bund spreads neared their 2011 peak."

"Over the weekend our US equity strategists upgraded US tech from neutral to positive, reversing a well-publicised move they made three weeks ago. They see the sector having underperformed the market by 16% over those three weeks, with it being down -11% against the rest of the index being up +6%. It's now at the bottom of a channel versus the index, levels its bounced aggressively off 5 times in the last 2.5 years."

"Asian equity markets are snapping back this morning with the KOSPI (+2.77%) leading gains buoyed by index heavyweights SK Hynix and Samsung Electronics. Elsewhere, Chinese stocks are also trading decently higher with the CSI 300 (+0.89%) and the Shanghai Composite (+0.97%) outperforming the Hang Seng (+0.72%). Meanwhile, the Nikkei (-0.01%) is back to flat with Kioxia down over -15% after a Q3 forecast miss. Kioxia was the largest company in the index in late June trading at over 36,000. It's now back to just over 11,000 showing the recent dispersion in the AI trade. Elsewhere the S&P/ASX 200 (-0.57%) is lower as the RBA starts its two-day policy gathering. "

"S&P 500 (+0.49%) and NASDAQ 100 (+1.01%) futures have snapped back up this morning."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)