Danske Research Team describes Friday’s equity selloff as heavily concentrated in US semiconductor and large-cap tech names after a roughly 50% two‑month rally. The bank argues the move was not primarily driven by Iran headlines or US jobs data. It characterizes current conditions as a strong bull market where sharp, temporary setbacks are to be expected.

Tech correction follows steep prior gains

"Equities sold off sharply on Friday, particularly during the US session, led by tech. Still, it is worth noting that more industries actually finished higher than lower on the day, despite the weakness in the headline US indices. The sell-off was extremely concentrated: US semiconductors were down 8.2%, and semis account for roughly 15% of the S&P 500."

"The VIX rose to 21, headline indices were lower, led by Nasdaq, but small caps outperformed. That points to tech-led large-cap underperformance rather than a broad-based risk-off move. Importantly, this had nothing to do with Iran. The Iran headlines came later, and oil was down on Friday. Nor was this caused by stronger jobs data."

"That may well have been the trigger, but it is a poor explanation for the move. The real reason is that global tech, the largest sector in the world, had risen around 50% in just about two months. After that kind of move, setbacks like Friday's are entirely normal."

"Even if the Fed were to hike, or if oil were to rise 3% (like this morning), that does not change the outlook for the AI build-out or the extreme earnings growth currently being delivered. Hence, this should not be used as the excuse for why tech sold off on Friday."

"Asia is massively lower this morning, especially in markets where tech has driven strong year-to-date performance. That should be seen in the same light. European futures are lower, catching up to Friday's late US weakness, while US futures, especially in the tech space, are higher this morning."

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