Scottish Mortgage Trust falls 13% as tech rout hits growth stocks

Scottish Mortgage Trust's 13% slide from its 2026 peak reflects a deepening selloff in the high-growth technology stocks that underpin its portfolio.

Scottish Mortgage Trust shares slumped to 1,357p on Tuesday, their lowest since April 14, extending a decline that began June 3.

"The trust's discount to net asset value is widening as the market reprices the growth assumptions baked into its largest holdings," said Stephen Innes, managing partner at SPI Asset Management.

The 3.3% drop in SMT shares tracked a broader rout in growth stocks. The Nasdaq Composite fell 2% on Tuesday after sliding 1.3% on Monday, while the S&P 500 lost 1.4%. SpaceX, one of SMT's top private holdings, plunged 16% on Monday before rebounding 3.1% on Tuesday. Micron Technology tumbled 11%, Advanced Micro Devices fell 5.9% and Nvidia dropped 3.8%.

The selloff raises questions about whether the artificial intelligence investment cycle can sustain the valuations of SMT's concentrated portfolio. Micron's earnings report on Wednesday will serve as a key test of whether AI-related capital expenditure still has sufficient earnings runway, according to SPI's Innes.

The FTSE 100 edged 0.1% lower to 10,428.85, held back by weakness in miners and growth stocks. The FTSE 250 fell 1.2% to 22,926.47. Polar Capital Technology Trust, another growth-focused investment trust, also declined 3.3%.

UK economic data added to the cautious tone. The S&P Global flash UK composite output index fell to 49.4 in June from 49.7, missing the 50.6 consensus and marking a second consecutive month of contraction in private sector activity. The services business activity index dropped to 48.7, its lowest in 41 months.

Tech Selloff Spreads to Asia and Memory Chips

The weakness extended across global markets. Japan's Nikkei 225 slumped 3.6%, with SoftBank falling 10% and Tokyo Electron losing 6.2%. In South Korea, SK Hynix and Samsung each dropped 12%, as the selloff in memory-chip stocks intensified ahead of Micron's earnings.

"The market's immediate concern is no longer just AI demand — it is whether the investment cycle is beginning to outrun the economics needed to justify it," SPI's Innes said.

Miners Drag on London Blue Chips

Weak metals prices weighed on London's mining sector. Antofagasta fell 5.5%, Anglo American dropped 5% and Glencore lost 4.2%. Gold miners Fresnillo and Endeavour Mining declined 5.2% and 3.2%, respectively, as gold traded at $4,134.67 an ounce, down from $4,184.04 on Monday.

Brent crude slipped to $77.10 a barrel as more tankers returned to the Strait of Hormuz following the US-Iran deal, raising expectations of increased oil supply.

On the upside, Bunzl rose 5.6% after raising its 2026 revenue guidance, citing stronger-than-expected first-half trading and improving volumes in North America.

The US 10-year Treasury yield traded at 4.49%, down from 4.51% on Monday, while sterling weakened to $1.3198.

This article is for informational purposes only and does not constitute investment advice.