ASX 200 stocks dive 2.4% in worst trading day since Ukraine crisis hit

It's not a good start to the week for the market.

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Key points

  • ASX 200 stocks fall hard on open
  • Shanghai is facing extended COVID-19 lockdowns
  • Energy and commodity prices are also in retreat on slowing China growth outlook

The S&P/ASX 200 Index (ASX: XJO) isn't off to the best of post-holiday starts.

At all.

ASX 200 stocks were down 2.4% in morning trade, having shed 2.3% within the first minutes of the opening bell. At the time of writing, however, the benchmark index is clawing back some ground, now 1.88% lower.

That's the worst performance for ASX 200 stocks since 21 January, when Russian forces crossed into Ukraine and unleashed war on the European continent.

Energy and resource companies are among the worst performers today, as witnessed by the 5.1% loss on the S&P/ASX 200 Energy Index (ASX: XEJ) and the 5.4% loss posted by the S&P/ASX 200 Resource Index (ASX: XJR) at this same time.

So, why are investors hitting the sell button today?

Why ASX 200 stocks are under pressure

ASX 200 stocks have faced a multitude of headwinds in 2022.

First, there was rising global inflation and the spectre of numerous interest rate hikes ahead.

Then there was Russia's horrendous invasion of neighbouring Ukraine.

Now COVID-19 is back in the playbooks.

While Australia has joined most of the rest of the world in reopening its domestic and international borders and learning to live with the coronavirus, China remains intent on its COVID-zero policies. And this determination is seeing Shanghai, a city with more residents than all of Australia, forced into extended lockdowns.

Now signs are emerging that China, the world's number two economy, is facing some serious setbacks in its growth ambitions. And that's having a big impact on commodity and energy prices.

Brent crude, for example, is currently trading for just under US$103 per barrel. That's down 9% since this time last week when that same barrel was fetching just over US$113 per barrel.

Even more crucially for the Aussie economy and some of the top ASX 200 stocks by market cap, iron ore is taking a hit.

The industrial metal is down some 10% to $US135.75 per tonne.

As the Australian Financial Review reports, China's lockdowns have seen Nomura cut its Q2 forecast for China's GDP growth to 1.8% from 3.4%.

According to Nomura's chief economist Ting Lu:

Without the ending in sight, Chinese households and private sector corporates may reduce their investment in their homes and capital goods. With other countries shifting to full reopening, China's export growth is set to slow even without lockdowns.

Best and worst performers

There aren't a whole lot of top performers among ASX 200 stocks to look at today.

In fact, only three of the 200 are posting gains in excess of 1.0%.

Of those, Unibail-Rodamco-Westfield (ASX: URW) leads the pack, up 2.9% at the time of writing.

As for the worst performers, that unwanted honour goes to EML Payments Ltd (ASX: EML), down 35%. Investors are selling shares after the financial services company cut its earnings guidance for FY22 in an ASX update this morning.

And with iron ore tanking, you won't be surprised to find the likes of BHP Group Ltd (ASX: BHP) among the bottom ten performers of ASX 200 stocks as well. The BHP share price is down 5.3% today.

Deriving an even greater share of its revenue from iron ore, the Fortescue Metals Group Ltd (ASX: FMG) is falling even harder, down 6.46% at the time of writing to $19.85 per share.

As long-term investors in ASX 200 stocks, we know that down days – like what we're witnessing today – happen. We also know that, historically, they'll fade away as investors look to capture good value from the markets.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended EML Payments. The Motley Fool Australia owns and has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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