Investors have poured a record amount of money into US technology shares, according to Bank of America, signalling fresh optimism that the sharp downdraft in the sector earlier in the year has turned.
The new money into the sector further reverses a run of outflows through the first half of the year as tech shares fell sharply against the backdrop of high inflation and rising interest rates, which hurt tech shares more than any other sector.
Last week’s total means investors have delivered $US4.5 billion of net inflows into technology shares for the year, according to the Bank of America data, which helps to explain a rally in the US equity market over the past two months.
The inflows for tech shares follow a broadly positive series of corporate earnings for the June quarter, in which the large technology companies again displayed a robust ability to deliver strong results.
The present valuations across the sector would offer an attractive entry point should tech shares rally further, while a slower growth backdrop for the economy would favour tech companies as investors flock to tech shares for growth.