MARKET REPORT: Tech funds hit as Tesla hits the skids

MARKET REPORT: Eye-watering fall in Tesla shares drags on the funds British savers have used to ride the US tech wave

An eye-watering fall in Tesla shares dragged on the funds British savers have used to ride the US tech wave. 

Scottish Mortgage Investment Trust and Baillie Gifford US Growth Trust were among the funds hammered by the electric car maker’s almost 14 per cent slide in early trading. 

Tesla has been under the cosh for weeks now as critics questioned whether the explosive rise in its share price meant it was overvalued. Boss Elon Musk’s quest to tie its fortunes to bitcoin have seen its value fall in line with the cryptocurrency’s drops while fears about inflation have hit tech stocks across the board. The toxic cocktail has made Tesla more vulnerable than many of its fellow tech behemoths on the Nasdaq. 

UK investors, who have taken several hammerings lately, rushed to leave the booming funds in case the Tesla sell-off continues and the other major tech shares get knocked too. 

Tesla managed to recoup much of the losses by late last night trading down around 3.5 per cent. But UK funds weren’t so lucky. On the FTSE100, Scottish Mortgage Investment Trust fell 6.5 per cent, or 71p, to 1017p, while mid-cap fund Baillie Gifford US Growth Trust tumbled 13.8 per cent, or 43p, to 269p, Edinburgh Worldwide by 11.2 per cent, or 38.5p, to 306p and Allianz Technology Trust by 9.4 per cent, or 260p, to 2520p. 

BT rallied for a third day as investors toasted the benefits it will receive from the super deduction announced in Wednesday’s Budget. The two-year policy will allow companies investing in new plants and machinery to reduce the tax bill on this spending by 130 per cent – which should include BT’s huge internet infrastructure programmes. BT has added £1.5billion to its value – or around 12 per cent to its share price – since Chancellor Rishi Sunak unveiled the pledge. The company’s shares closed up 4.9 per cent, or 6.65p, at 141.45p last night. 

While BT was the top riser on the Footsie leaderboard, the biggest gainer on the FTSE250 was another telecoms and technology group. Spirent Communications surged after it snapped up WiFi and 5G testing kit designer Octoscope for £40m – though this could rise to £53m if it hits certain performance targets.

Spirent previously said it was considering buying other companies and has funded this takeover with money from its existing cash pile. Following the deal with US-based Octoscope – whose customers include Facebook, Google, Nokia and Sony – Spirent Communications’ shares added 6.6 per cent, or 15p, to 243.5p.

BT and Spirent’s gains aside, the slump in the big-name tech funds meant the FTSE 100 fell 0.3 per cent, or 20.36 points, to 6630.52, while the mid-cap FTSE 250 index slid 1.6pc, or 334.92 points, to 20961.31. 

Oil prices surged by another $2 a barrel – hitting a peak of almost $69, which had not been seen since January 8, 2020. It came as Opec and its allies unexpectedly decided earlier this week to keep making voluntary cuts to their oil production into April.

As well as helping the Footsie’s oil majors BP (up 1.8 per cent, or 5.7p, to 318.8p) and Shell (up 1.4 per cent, or 21p, to 1487.6p), smaller groups such as Tullow Oil (up 9.8 per cent, or 4.54p, to 50.82p) and energy services group Petrofac (up 4.2 per cent, or 5.55p, to 136.8p) also benefited. 

Petra Diamonds shares shot up 7.2 per cent, or 0.11p, to 1.64p after it sold a 299.3-carat sparkler for almost £9m. The gem came from Petra’s famous Cullinan mine in South Africa. The company has had a turbulent time of late – it is investigating alleged human rights abuses at its Tanzanian mine and is restructuring after Covid battered the already-struggling diamond industry.