The Zip Co Ltd (ASX: Z1P) share price is sinking on Tuesday amid a broader rotation out of tech shares, driven by worries about persistent inflation, slowing growth, and looming interest rate hikes.
At the time of writing, Zip shares are down 4.82% to $6.52.
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US-tech shares slammed overnight
The tech-heavy Nasdaq Composite tumbled 311 points, or 2.14%, last night to a two and a half month low.
The sharp fall was headlined by tech heavyweights including Apple, Microsoft, Amazon, and Alphabet, all of which fell at least 2%.
Perhaps more relevant to the Zip share price, its US-listed rival Affirm tumbled 8.42% overnight.
"The on-again, off-again nervousness about Federal monetary policy, the disruption among supply chains and the potential for higher taxes (along with other concerns such as inflation risk and higher taxes) have kept market enthusiasm in check," Oppenheimer Asset Management's chief investment strategist John Stoltzfus told CNBC.
"Meanwhile rotation and rebalancing efforts, along with some profit taking by skeptics, bears and nervous investors, account for a significant part of market activity on any given day."
ASX tech shares follow through
ASX tech shares have taken the brunt of the selling with the S&P/ASX Information Technology (INDEXASX: XIJ) down 3.44% by midday and down 6.25% in the last five days.
Headlining the sharp declines is the Afterpay Ltd (ASX: APT) share price, down 5.33% at the time of writing.
So the weak Zip share price might come as no surprise given the weak performance of its sector and peers.
Other heavyweight tech shares including Xero Limited (ASX: XRO), WiseTech Global Ltd (ASX: WTC) and NextDC Ltd (ASX: NXT) are also logging hefty declines, down 2.47%, 2.72% and 3.02% respectively.
Zip share price testing 8-month lows
The $6.50 region has proven to be a supportive neckline for the Zip share price. It's bounced strongly from there on previous occasions in mid-May and late July.
However, the broader market is looking far from supportive with the S&P/ASX 200 Index (ASX: XJO) rolling over to a 2-month low and a correction well underway for the Nasdaq, down 7% since the beginning of September.
