UK investors were among those caught off guard today as global tech stocks suffered their worst day in months, with the FTSE 100 plummeting 0.4% to 10,391.72p by midday. The downturn was triggered by a significant bond issue from Elon Musk's SpaceX, which announced plans to raise at least £15.1bn through the offering. This move saw SpaceX's shares slump by 16% to $154, wiping over $350bn from Elon Musk's personal wealth and casting a shadow over the global tech sector.
The ripple effect was swift and far-reaching, with Asian markets experiencing sharp declines overnight. South Korea's Kospi index plummeted by 8.3%, prompting a trading halt as investors rushed to offload semiconductor-related holdings. Analysts pointed to earlier falls on Wall Street, where the Nasdaq index slipped 1% after a challenging session, as a key driver for the broader market weakness.
UK investment funds with exposure to SpaceX also felt the heat, with Scottish Mortgage Investment Trust's shares down 4% by midday and trading at 1,381.62p. Baillie Gifford's US Growth Trust, which holds around 15% of its portfolio in SpaceX, saw its shares decline by 3% to 321.78p.
While the FTSE 100's losses were less severe compared to some continental European markets, mining companies led the charge lower, with Antofagasta plummeting by nearly 7%, Anglo American and Fresnillo both down by 5.5%. Sage, one of the City's largest tech firms, bucked the trend with a 1.5% increase to 814.40p.
This market movement underscores the significant influence that major tech companies and their corporate actions can have on global financial markets. The decision by SpaceX to issue a substantial bond to fund its AI ambitions has clearly resonated with investors, leading to a re-evaluation of its stock and other high-growth technology assets.