As most ASX investors would be all too aware of, it's been a horrid time for the S&P/ASX 200 Index (ASX: XJO) and most ASX shares over the past few weeks and months.
The ASX 200 saw its 2023 (to date) peak back in February. Back then, all seemed well with the new year, with the ASX 200 hitting a high of 7,567.7 points on 3 February. That was less than 1% away from the all-time high of above 7,600 points that we all enjoyed back in mid-2021.
As recently as July, it looked as though the index had a shot of getting back up there too, with the ASX 200 climbing to around 7,460 points,
But fast forward to today, and we see a very different story. After closing last week's trading at 6,826.9 points, the ASX 200 has once again opened the new week with a heavy loss. Right now, the index has slipped another 0.51% today and has sunk below 6,800 points.
Even worse, the ASX 200 has also hit a new 52-week low this Monday, descending to 6,751.3 points soon after market open this morning. That's the lowest ASX 200 shares have traded at since October 2022. See for yourself below:
What's more, the ASX 200 has now lost 8.8% since its August peak and 10.1% since its February 52-week high. This means that the index is now in official correction territory.
A correction is a 10% or greater fall from an index's most recent high, and a crash is a 20% fall or more. So let's hope we don't get to that level.
So what's behind today's new low for ASX 200 shares?
Why has the ASX 200 just hit a new 52-week low?
Well, there's undoubtedly a cauldron of issues that are combining to sap investor sentiment.
The current and tragic war in the Middle East is probably the most prominent. Investors remain highly concerned that the current Israel-Hamas conflict could spill over into other Middle Eastern countries and territories.
If this happens, it could have major implications for oil prices, as well as for world peace and security in general. This alone is arguably enough to give investors the wobbles.
But we also have our own economic troubles to consider. Inflation remains sticky in the Australian economy. This, in turn, has raised the prospects of more interest rate rises by the Reserve Bank of Australia (RBA).
A few months ago, most of us hoped that the Reserve Bank of Australia's cycle of interest rate hikes was over. Today, most commentators are treating a Melbourne Cup day rate hike next month as a done deal.
This is almost certainly proving to be a major drag on the ASX 200 share market as well.
So with nothing but bad news coming from the world stage, as well as from the Australian economy, it's not too shocking to see a new 52-week low for the ASX 200 index right now, as unpleasant as that may be for ASX investors.
But if these sobering numbers have (understandably) got you down, remember that successful ASX 200 stock market investing requires us to ride out these tough times with emotional detachment and a focus on the long-term wealth-building nature of the share market.
We'll end with some wise words from our chief investment officer, Scott Phillips, from last week:
Remember that investing, over the very, very long term, has delivered compound returns of around 9% per annum, in both Australia and the US.
No guarantees, but that means you could have turned $10,000 into $138,000 over the last 30 years, just by buying an index and going fishing.
