Macro Research Digital economy: Will rising rates be a wham | FSMOne SG - Research Highlights

Macro Research

Digital economy: Will rising rates be a whammy for tech stocks?

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• The Fed announced in December 2021 that it will double the pace of tapering its bond purchase program and will be increasing the number of interest rate hikes, as a response to rising inflation.

• The relationship between interest rates and tech stocks is not so clear, as there have been periods when the two move in tandem and periods when the two move in the opposite direction.

• Interest rates alone do not give the full picture of tech stocks price movements. Rather, earnings results and future earnings expectations play a big part in tech stock prices.

• With the current macroeconomic backdrop of inflation and rising interest rates, certain companies potentially do better, such as those with pricing power and lower debt ratios.

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