Why did the ASX 200 have such an awful day? Blame energy shares

Energy shares lost more than most on the share market today.

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It was a truly terrible start to the trading week for the S&P/ASX 200 Index (ASX: XJO) and ASX shares this Monday. And those looking to blame something for this horrid session should look no further than ASX energy shares.

After recording a much-needed gain last Friday, the ASX 200 was at it again today, shedding a nasty 0.79% by the end of the trading day after hitting a new 52-week low this morning.

There were many red sectors on the market today. But energy shares stood out from the pack. The S&P/ASX 200 Energy Index (ASX: XEJ) recorded a depressing 2.59% fall by the end of trading today. In contrast, the next worst-performing sector was the consumer staples space. But the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) only saw a tame-by-comparison drop of 1.27%.

It's not hard to see why the energy index was so hard hit. Just take a look at how some of the ASX 200's largest energy shares went this session:

  • Whitehaven Coal Ltd (ASX: WHC), down 5.57% to $7.29
  • New Hope Corporation Limited (ASX: NHC), down 3.64% to $5.82
  • Woodside Energy Group Ltd (ASX: WDS), down 2.53% to $34.31
  • Ampol Ltd (ASX: ALD), down 2.47% to $31.56
  • Beach Energy Ltd (ASX: BPT), down 1.92% to $1.54

So why were energy shares so on the nose this Monday?

Why did energy shares drive the ASX 200 lower on Monday?

Well, it's hard to say. There has been a lot of volatility in this space ever since the present crisis we're seeing in the Middle East started earlier this month. Investors have been betting on how the conflict will impact energy markets ever since, given how important the Middle East is to global energy supply and the geopolitical ramifications an ongoing conflict could bring to the surface.

At the end of last week, we saw a big surge in energy prices. As my Fool colleague covered this morning, both Brent and West Texas Intermediate (WTI) prices rose by almost 3% last Friday. However, according to Bloomberg, oil futures have taken a big dive in early international trading, with WTI crude down 1.4% to US$84.34 a barrel, and Brent down 1.23% to US$89.37.

Perhaps the uncertainty over Israel's next move in the war (a possible large-scale ground invasion of Gaza) is causing this whipsaw volatility.

So maybe investors have had enough and taken some of the risks off the table today with this sector, especially given this early indication that energy prices may be heading down again this week. Whatever the cause, it would arguably be prudent for investors in ASX energy shares to expect the volatility to continue.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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