ARM Holdings plc Leads The FTSE 100 Sharply Down

Tech stocks like ARM Holdings plc (LON: ARM) are among the leading FTSE 100 (INDEXFTSE:UKX) fallers today.

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 11 April, 2014 1:21 pm BST

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

The FTSE 100 (FTSEINDICES: ^FTSE) is 1.25%, or 83 points, lower at the time of writing after a rapid sell-off in US and Asian markets last night.

ARM Holdings (LSE: ARM) and Sage Group were among the worst performers, falling 5% and 2% respectively, after the US technology index the NASDAQ suffered its worst day in three years, slumping 3%.

Shares in ARM have rocketed 600% in the last decade, and its microprocessor designs are featured in 99% of the world’s smartphones and tablets. Sage develops software products for small and medium sized companies.

Tech stocks have been trading at sky-high valuations for some time now. ARM, for instance, trades on a P/E of 38. Handsomely valued, but not as stratospheric as newly listed online businesses like AO World (a trailing P/E above 200) and Just Eat (a trailing P/E above 250).

These companies look ridiculously expensive, and their valuations assume barely a bump along the road — that their success is, in a word, inevitable. That might not be the case.

Morrisons, meanwhile, is among the few leading shares trading up, adding 2p to 200p.

To date in 2014 the FTSE 100 is down 2.5%, or 184 points, compared with a 639 point gain at this time last year. It’s likely that the tech sell-off in the last 24 hours could continue.