What's going so wrong for ASX 200 shares on Friday?

It's been a horror show for ASX 200 shares this Friday.

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It's been a calamitous end to the trading week so far this Friday for the Australian share market and most ASX 200 shares.

At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has tanked by a horrid 1.58%, pulling the index down from the 7,713 points it closed at yesterday to just 7,591.6 points at the time of writing.

This is the lowest the ASX 200 has been at in over a month. It's also shaping up to be one of the worst days for ASX 200 shares in 2024 to date.

Predictably with a fall of this magnitude, we are seeing some massive sell-offs amongst the top ASX 200 blue chip shares.

Commonwealth Bank of Australia (ASX: CBA) shares are presently down 1.6% at $114.37 each. This bank has now lost close to 6% since its new record high of $121.54 a share that we saw just last Friday.

Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ) are both faring even worse, currently nursing losses of over 2%.

The BHP Group Ltd (ASX: BHP) share price has shed 1.88% down to $42.25, while CSL Ltd (ASX: CSL) shares have tanked by 1.44% down to $278.57 each.

Not a good day to be invested in ASX 200 shares, to say the least.

So what on earth is going on here that is prompting these dramatic, weekend-ruining share price falls?

Why are ASX 200 shares cratering on Friday?

Well, these steep falls seem to be a result of some fresh economic data in the United States.

According to CNBC, The United States' February producer price index, which is a measure of wholesale inflation, came in with a 0.6% increase for the month.

Most economists reportedly expected a rise of 0.3%, so this shows that American inflation remained significantly hotter than expected last month.

This led to a spike in US government bond yields and a slump for the American share market in overnight trading.

Much of the rally that we've seen in US markets over the past few months (and the Australian market by extension) has arguably been fuelled by expectations that inflation would continue to trend lower over 2024, leading to global interest rate cuts.

This latest data seems to pour cold water on that notion. As such, investors are clearly panicking over the prospects of 'higher for longer' interest rates today.

For anyone wondering how this American data affects the ASX, it's important to keep in mind that our own Reserve Bank of Australia (RA) will find it harder to justify interest rate cuts here in Australia if the US Federal Reserve is not winding back its own high interest rates.

So a very depressing end to the trading week (at least so far) for ASX 200 shares. Let's hope the picture gets brighter next week.

Motley Fool contributor Sebastian Bowen has positions in CSL. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. 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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