ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points

The S&P/ASX 200 Index (ASX: XJO) capped off one of its worst weeks in 3 months last week, dropping a substantial 2.4% over the week. It was a fairly ordinary week on the ASX 200 until Friday. From Monday to Thursday, the ASX 200 was up for the week (around 0.6%) and things seemed to be fairly ordinary. No major news, no significant market-moving events. But then Friday came and brought mayhem with it. Friday started with the ASX 200 plunging by 2.4% half an hour after market open. By 2pm, the index had fallen by another 0.8% and Friday ended up wiping 3.06% from the value of the ASX 200.

It was the ASX 200 blue chips that led these losses. The ASX's biggest share, CSL Limited (ASX: CSL), was down 4.09% on Friday, whilst the major ASX banks and Telstra Corporation Ltd (ASX: TLS) were all down more than 2%. Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) were both down by 3.39% and 3.94% respectively. BHP Group Ltd (ASX: BHP) was down 3.78% and Wesfarmers Ltd (ASX: WES) by 3.73%.

ASX tech shares, whilst not as important to the ASX 200 Index, were nonetheless the worst hit shares. Afterpay Ltd (ASX: APT) shares were down 6.7% and WiseTech Global Ltd (ASX: WTC) down 7.1% on Friday. Appen Ltd (ASX: APX), Xero Limited (ASX: XRO) and Altium Limited (ASX: ALU) were all down by more than 5%.

US markets bring ASX 200 carnage

The catalyst for these moves? Well, it didn't appear to have anything to do with the Australian economy or the Australian commercial landscape. Rather, it followed an extremely heavy night of selling over in the United States markets on Thursday night (our time), which logically reduces the value of almost every company on the ASX (I hope you're sensing the sarcasm here!). In all seriousness, the US markets have been on a tear in recent weeks, with big tech companies like Apple Inc (NASDAQ: AAPL) and Tesla Inc (NASDAQ: TSLA) in particular going bananas after recent stock splits.

Thursday night saw a dramatic correction of this run-up.

The tech-heavy Nasdaq Composite index dropped by 5% on Thursday night, with the broader S&P 500 Index dropping by 3.5%. It was the worst day for the Nasdaq since March. US tech shares took the brunt of these falls, with Apple down by 8% and Tesla by 9%. Other tech names like Amazon.com Inc (NASDAQ: AMZN) and Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) weren't spared either, dropping by 4.6% and 5.1% respectively.

There's little doubt that US tech shares' valuations had been becoming stretched in recent months in my view, so there was always going to be a pullback at some point. This week has delivered it and the spillover has hit the ASX in dramatic fashion.

How did the markets end the week?

As we've discussed, it was a dramatic week on the ASX 200. The index started out the week at 6,073.8 points and finished up on Friday at 5,925.5 points for a week-on-week loss of 2.44%. Monday started out strong with a 2.2% rise for ASX 200 shares. Tuesday then brought a 1.8% slump, which was promptly reversed on Wednesday with a 1.8% gain (despite official confirmation of Australia's first recession in 3 decades). Then Thursday brought a small 0.8% gain before Friday saw the week's gain destroyed with the 3.06% plunge.

Meanwhile, the All Ordinaries Index (ASX: XAO) also had a nasty week, starting out on Monday at 6,262.5 points and finishing up on Friday at 6,108.8 points for a week-on-week loss of 2.5%.

Which ASX 200 shares were the biggest winners and losers?

Now let's turn to the Foolish gossip pages with last week's winners and losers. As always, we'll start with the losers:

The week's recipient of the ASX 200 wooden spoon goes to wealth manager IOOF. Investors couldn't wait to get out of this company's shares after the completion of a mammoth $1.04 billion capital raising. IOOF intends to use this money to purchase wealth business MLC from National Australia Bank Ltd. (ASX: NAB). Clearly investors aren't too hot on the whole idea.

Next up we have Afterpay, a rare appearance for the buy now, pay later (BNPL) pioneer in the losers column. As one of the ASX's highest flying tech shares in 2020 so far, Afterpay was particularly vulnerable to the tech sell-off the ASX saw on Friday. The 6.7% fall on Friday was enough to pull Afterpay shares down nearly 12% last week. An announcement from US payments giant PayPal Holdings Inc. (NASDAQ: PYPL) that the company intends to rollout a BNPL product of its own didn't help either.

Platinum was a victim of the sell-off on Friday with no major news coming out of the asset manager, whilst Medibank also had a tough week, made tougher by the company going ex-dividend on Wednesday.

Now the losers are out of the way, let's take a look at last week's winners:

Taking out top spot on the ASX 200 last week was casino operator SkyCity. Investors were excited by this company's late-out-the-gate earnings report that the company released on Thursday, in which SkyCity said it expects to return to profit growth in FY2021.

Next up we have property tycoon Lendlease. Investors were evidently impressed by a 'strategy update' that the company released last week. Despite this bump in share price, Lendlease shares remain nearly 32% below where they started the year.

Investors also reacted positively to AMP's plans to potentially break up and sell the pieces of the iconic business, seeing some potential value for shareholders in the process.

Finally, we have agricultural company Costa. Costa shares have been in investors' sights for the last week after the company posted a positive earnings update the previous week.

What does this week look like for the ASX 200?

Last week's late market moves probably took most of us by surprise , and in my opinion, all eyes will be turning to the US markets this week for some directional guidance for the ASX 200. The US markets are closed on Monday (US time) for their Labour Day weekend, so we will have to wait until Tuesday night (our time) to get a gauge on how the Americans are feeling. 

I would anticipate some more volatility on the ASX if the US markets plunge again, but equally, I wouldn't be surprised to see the ASX 200 rally if US investors shake off the wobbles that last week saw when trading resumes.

So to prepare yourself for this week and whatever it may bring, here is a look at how the major ASX 200 blue chip shares are shaping up: