Tech is no longer the leading performer in the US stock market. Amid the almost euphoric start to the year for global equities, it might be easy to overlook a change that could yet shape the tenth year of the bull market.
In the US, industrials, consumer discretionary and materials, whose fortunes are all closely tied to the strength of the American economy, have this week outshone a sector that trounced everything else in 2017.
The tax cuts signed into law by Donald Trump will pose a challenge to the tech sector’s market dominance this year if the US economy finds a higher gear and polishes the profits and revenues of those sectors most sensitive to faster growth. Given the tech sector also pays a lower effective tax rate than others, it has less to gain from the reduction in the corporate tax from 35 per cent to 21 per cent.