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.
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.