It's been a fantastic day for the S&P/ASX 200 Index (ASX: XJO) so far this Thursday. At present, the ASX 200 has shrugged off yesterday's gloom and has rallied by 0.79% to back over 7,400 points. But ASX 200 tech stocks like Xero Limited (ASX: XRO) are having an even wilder party.
ASX 200 tech shares are on fire today, making the broader market's gains look insignificant. Just take leading ASX 200 tech share Xero. The Xero share price has jumped by 3.5% so far today to $81.94 a share.
It's not just Xero though. Most ASX 200 tech shares are on fire today. Block Inc (ASX: SQ2) is torching it up. Block shares have risen by a whopping 9.36% at the time of writing to $122.22 each, while Megaport Ltd (ASX: MP1) shares have risen by close to 8% at $6.39 each.
So what's going on with ASX 200 tech shares this Thursday that have resulted in such stellar gains?
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Why are ASX 200 tech shares like Xero on fire today?
Well, it could be a combination of factors. Firstly, US tech shares have been on a bit of a run lately. The tech-heavy NASDAQ-100 Index (NASDAQ: NDX) has now gained more than 3% over the week so far. And some US tech giants like Tesla Inc are up even more than that.
US tech stocks often seem to set the mood for our own ASX 200 tech shares, so this is probably feeding into the positive sentiment we are seeing.
The other thing that could be playing a role in these gains is today's Australian unemployment figures.
This morning, the Australian Bureau of Statistics (ABS) released its latest labour market data. This showed the unemployment rate in the Australian economy rose from 3.5% in December to 3.7% in January.
The markets have responded well to this news, with the ASX 200 recording its highest intra-day levels after the report was publically released.
Rising unemployment could be showing that the Reserve Bank of Australia's (RBA) rapid interest rate hikes are starting to have some effect on the economy. Why is this good news for shares?
Well, a slowing economy could mean that the RBA might be about to stop hiking rates. And lower interest rates are good news for shares. Especially tech shares, which often rely on valuations based on future, not present, profitability.
So it's probably a combination of these factors that are helping the ASX 200 tech stocks like Xero to perform so strongly today.
