Niche ASX stocks are critical to tech boom // Motley Fool...

Niche ASX stocks are critical to tech boom // Motley Fool...
Niche ASX stocks are critical to tech boom // Motley Fool...
The S & P / ASX 200 Index (ASX: XJO) is down 0.1% in early afternoon trading today.

It does so after the index of the top 200 publicly traded stocks hit more than 6-month highs yesterday.

We have been told that the impetus for today’s modest withdrawal is once again doubts about the next round of US government stimulus measures. They saw these doubts S & P 500 Index (SP: .INX) fall by 0.6%. However, that is only 1.9% below the all-time high.

We’ll spare you the details of the recent Washington DC political deadlock. They really are no different from last week. Or the week before.

What is no different is the US government will Adopt new stimulus measures that may be worth billions of dollars. The only question is timing.

As long-term investors, this timing shouldn’t concern us. If your investment horizon is at least three years, a few weeks or even months of political wrangling over the next package of spending should be little more than a fading blow on the street.

Tech stocks shine brightly

Over in the US the tech-laden ones NASDAQ-100 (NASDAQ: NDX) was largely immune to yesterday’s sell, closing flat (down 0.04%). That’s just 2.7% less than the index’s record highs on September 2nd.

We see the same thing here in Australia.

The S & P / ASX All Technology Index (ASX: XTX) – holding 50 of Australia’s leading and emerging technology stocks – hit a new all-time high yesterday. And today it’s another 1.3%.

The All Tech Index is enjoying a helpful boost from people like Afterpay Ltd. (ASX: APT). The giant “Buy Now, Pay Later” (BNPL) has dispelled doubts about potential competitors and its assessment of trading at its own record rate again.

So do cloud-based accounting software companies Xero Limited (ASX: XRO). Xero stock price, which is increasing in intraday trading today, is up nearly 18% in October alone.

Budget offers fresh tailwind

Many investors fear they may have missed the boat as many ASX tech stocks are at or near record highs. However, there are many reasons to believe that the well-run companies in this sector, and in most sectors of the ASX, can see a far higher share price.

According to Anthony Doyle, cross-asset specialist at Fidelity International, today’s low-interest environment gives investors little choice but to turn to stocks that offer potential price gains in addition to dividend payments.

Says Doyle (quoted by the Australian Financial Review):

We haven’t passed the 7000 level we saw at the beginning of the year, but in terms of 1987 and 2009, the upswing certainly surpasses both episodes and one of the main reasons is the collapse in real returns …

We don’t think the market has recovered too much. We don’t think it has outdone itself. In fact, especially on last week’s budget news, we are fairly bullish on the outlook for Australian stocks …

Central banks are cutting interest rates as low as they are by removing the power of compound interest from cash and defensive assets. Investors are driven into riskier and riskier assets in an attempt to reap the returns they once got from defensive assets.

David Bassanese, chief economist at BetaShares, the manager of Exchange Traded Funds (ETF), believes the Australian tech sector is a winner from the new budget.

As the AFR Bassanese reportedly cited the government’s “new commitment to roll out ultra-fast broadband, advance electronic invoicing in the public sector, streamline the corporate registration process and expand the digital identity system.”

Bassanese adds, “This could well lead to a significant increase in capital expenditures and sales of computer and office equipment, as well as cars and trucks.”

We’re going to leave cars and trucks on the table today and stick with technical stocks.

ASX stocks defend our virtual world

Australia and most of the developed world introduced five years of technological innovation within months of the pandemic outbreak.

This means that it is more important than ever that we can protect our personal, business and government data from cyber thieves and prying eyes.

According to Richard Price, the chief executive of the South Australian defense agency Defense SA (quoted by the AFR):

Mitigating and managing the risk of cyberattacks by criminals is an essential activity for everyone today. For businesses in critical infrastructure and critical supply chains, of which defense is an obvious example, the threats are far more sophisticated, persistent, and patient.

There are a number of ASX stocks that are in the cybersecurity space. You may want to expand your own portfolio Tesserent Ltd. (ASX: TNT).

Tesserent provides cybersecurity and networking solutions to corporations and government institutions across Australia.

The price of the Tesserent share has risen a phenomenal 525% since the beginning of the year. The shares hit an all-time high on August 14th. The stock price is sliding today and is down 14% from the record high, potentially providing a profitable entry point for investors.

That tiny ASX stock could be the next back payment

A little-known Australian IPO has doubled since January, and renowned Australian moonshot stock picker Anirban Mahanti sees a potential millionaire waiting …

With ‘Doc’ Mahanti believing this fast-growing company has all the hallmarks of real moonshot potential, forget ‘buy now, pay later’, this stock could be the next hot stock on the ASX.

Doc and his team released a detailed report on this tiny ASX stock. Find out how to get your NEXT Afterpay today!

See how you can find out the name of this stock

Returns from October 6, 2020

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