Why is the ASX share market down today?

The share market had a very disappointing day on Thursday…

| More on:
woman looks shocked at mobile phone

Image source: Getty Images

It certainly has been a brutal day for the S&P/ASX 200 Index (ASX: XJO) and the wider share market.

The benchmark index has just closed the day down a sizeable 1.9% at 7,369.5 points.

In light of this, investors may be wondering why the ASX share market is down today.

Why is the ASX share market down today?

Investors have been selling shares indiscriminately, with every single ASX share market sector in the red on Thursday.

However, the declines have been heaviest among the communications, energy, financials, materials, and technology sectors. This has seen the likes of Afterpay Ltd (ASX: APT), Commonwealth Bank of Australia (ASX: CBA), Origin Energy Ltd (ASX: ORG), Orocobre Limited (ASX: ORE), and Virgin Money UK CDI (ASX: VUK) all record larger declines than most.

The latter two shares were the worst performers on the ASX 200 on Thursday. The Virgin Money UK share price fell 8% and the Orocobre share price lost 6% of its value.

The best performing area of the market was the consumer staples sector. Albeit with a decline of 0.75% for that day.

The catalyst for the ASX share market weakness appears to have been a combination of a poor night of trade on Wall Street, a pullback in commodity prices, and the expectation of another decline in the United States tonight.

In respect to the latter, according to CNBC, futures contracts are currently pointing to the Dow Jones opening the session 0.4% lower and the Nasdaq opening down 0.3%.

What else could be weighing on the market?

Something else that could be causing investor panic are concerns that the United States could be just weeks away from defaulting on its debts.

According to The Age, on Wednesday US Treasury Secretary Janet Yellen warned that the government’s cash reserves could be exhausted in October. This follows the US hitting its legislated debt ceiling at the end of July.

There are fears this could throw the US economy and global financial markets into chaos.

Anything else?

Also potentially weighing on the ASX share market has been profit taking. For example, the two worst performing ASX 200 shares today are among the best performers in 2021.

In fact, even after today’s decline the Orocobre share price is up 88% this year and the Virgin Money UK share price is up 53%.

All in all, while today’s decline has been a bit of a mystery, one thing is for sure. That is that investors will be hoping for a big rebound on Friday.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

Motley Fool contributor James Mickleboro owns shares of Orocobre Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News