The S&P/ASX 200 Index (ASX: XJO) has tumbled 1.68% in late afternoon trade to a 1-month low of 7,383.
The tech sector is taking the brunt of today’s selloff, with the S&P/ASX Information Technology (INDEXASX: XIJ) index down 2.61%.
Thursday’s largest tech losers
Megaport Ltd (ASX: MP1) is leading today’s selloff, down 4.36% to $16.50.
What’s driving the ASX 200 lower?
The ASX 200 has taken off after Wall Street following more signs of a slowing US economy.
According to CNBC, the US Federal Reserve reported that growth overall had “downshifted slightly to a moderate pace”.
The report said that “The deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most districts, reflecting safety concerns due to the rise of the delta variant, and, in a few cases, international travel restrictions.”
In addition, CNBC flagged that the Federal Reserve has indicated that it is likely to begin withdrawing some of its stimulus policies before year-end.
Back at home, the commentary from the Reserve Bank of Australia (RBA) is relatively consistent.
In the RBA’s September monetary policy media release, it said that:
The recovery in the Australian economy has, however, been interrupted by the Delta outbreak and the associated restrictions on activity. GDP is expected to decline materially in the September quarter and the unemployment rate will move higher over coming months.
However, unlike the Fed, the RBA plans to keep “very accommodative financial conditions” in place to support the recovery of the Australian economy.
The Board’s decision to extend the bond purchases at $4 billion a week until at least February 2022 reflects the delay in the economic recovery and the increased uncertainty associated with the Delta outbreak.