British technology stocks slumped in early trade after New York’s Nasdaq index dropped over 3% in its worst session since late 2011 amid fears of a new tech bubble.
Chip designer ARM dived 3.6%, software group Sage fell 2.5%, mobile banking firm Monitise was off 3.2% and fashion retailer Asos 3.4%.
Recently floated tech companies also took a pounding. Online food delivery firm JustEat fell 3.8%, below its debut price seen in last week’s initial public offering. White goods electricals firm AO World tumbled 2%.
US stocks have fallen for most of the last week and took another turn for the worse last night, hitting sentiment in London. Facebook dived 5.2%, Amazon 4.4%, Google 3.6% and Twitter 2.7%. George O’Connor at broker Panmure Gordon said: “There was no particular catalyst. Maybe it’s investors doing a double-take and saying, ‘Crikey, that’s expensive.’ We’ve said since last summer that the sector looked pricey.”
Valuations had soared to more than 100 times underlying earnings — described by City spread betting firm ETX Capital as “astronomically high”.The jitters have had a mixed impact on London’s IPO market. Advertising tech firm Matomy Media pulled its float but digital voucher company Eagle Eye successfully raised £6 million this week.