Inflation, war, rising interest rates: Prices are collapsing on the US stock exchanges, especially tech stocks. The iPhone maker Apple loses so much that the oil company Saudi Aramco is now worth more on paper.
The world’s largest oil company, Saudi Aramco, replaced the technology group Apple as the world’s most valuable company on Wednesday. While Saudi Aramco’s share price has benefited from high oil prices in recent weeks, the iPhone manufacturer’s paper has come under increasing pressure due to rising capital market interest rates, supply bottlenecks and growth concerns. This Wednesday, Apple fell five percent to its lowest level since the end of October last year.
Saudi Aramco’s share price on the home exchange Tadawul in Riyadh had risen by more than 17 percent since mid-March. The Apple price, on the other hand, has lost more than 18 percent since the end of March. The prospect of rising interest rates caused investors to sell technology stocks in particular. Because in the long phase of cheap money, investors had increasingly relied on high-growth tech companies. Now, however, interest rates are likely to rise sharply in view of the high inflation, which could mean that Apple, Amazon, Microsoft & Co are clearly overvalued.
Dow Jones at lowest level since March 2021
The tech-heavy Nasdaq 100 fell 3.06 percent to 11,967.56 points on Wednesday, falling below 12,000 points for the first time since November 2020. The leading index Dow Jones Industrial did better than the Nasdaq stock exchange with a discount of 1.02 percent to 31,834.11 points. Still, the Dow is testing its lowest level since March 2021. Tech stocks were also the biggest losers in the Dow.
Where the future industries come under pressure, the company with the very traditional raw materials business seems to benefit: the shares of Saudi Aramco, which went public at the end of 2019, had recently reached a record high. The company currently has a market capitalization of $2.43 trillion. In doing so, they left Apple behind for the first time since 2020. The company from Cupertino in California is only worth 2.37 trillion dollars with a loss of a good five percent this Wednesday. At the beginning of the year, Apple, at around $3 trillion, was $1 trillion heavier than the Saudi Arabian oil producer.
However, the two companies can only be compared to a limited extent. Only a small proportion of Aramco shares are freely tradable, and the vast majority are in state hands. Shares in the commodity group are scarcer than those of Apple anyway – and can therefore quickly become more expensive.
The US Federal Reserve is likely to raise interest rates by a further 1.5 percentage points this year. That and the prospect of an ongoing war in Ukraine mean that the big tech companies cannot be expected to return to their former strength anytime soon, said Tim Ghriskey, portfolio strategist at Ingalls & Snyder. He spoke of “panic selling” at a number of technology stocks and other highly rated companies. Investors are likely to reinvest the funds that are freed up in the process, not least in energy stocks whose growth prospects are rosy. “Companies like Saudi Aramco benefit considerably from this mixed situation,” says the expert.