Why is the ASX 200 getting hammered on Wednesday?

ASX 200 investors are overheating their sell buttons on Wednesday. But why?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX 200 Index (ASX: XJO) is taking a beating today.

The benchmark index closed down 0.1% yesterday at 8,103.2 points. In morning trade on Wednesday, the ASX 200 stands at 7,947.7 points, down 1.92%.

The big early September selloff is reminiscent of what we witnessed in the first week of August. As you may recall, by the time the closing bell sounded on 5 August, the ASX 200 was down 5.7% in just three trading days.

But investors thinking about selling on down days like today should bear in mind the big rebound that followed. The index of the top 200 Aussie stocks soared 5.9% from 5 August through to this morning's open.

As for what's spooking the market today, let's have a look.

A man in a business suit wearing boxing gloves slumps in the corner of a boxing ring representing the beaten-up Zip share price in recent times

Image source: Getty Images

Why is the ASX 200 tumbling today?

The Aussie stock market isn't the only one under pressure.

Overnight in the United States, the S&P 500 Index (SP: .INX) closed down 2.1%, and the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) plunged 3.3% on the first day of trading following the Labor Day holiday weekend.

ASX 200 and global investors alike are getting hit with at least three headwinds at the moment.

First, there are increasing concerns that the exuberance surrounding artificial intelligence (AI) stocks may have run ahead of itself in terms of the timeline required to deliver on those billions of dollars in investments flowing in.

Coupled with fears that Taiwan's semiconductor industry may be at risk from China, this saw the Nvidia Corporation (NASDAQ: NVDA) share price crash 9.5%. That pain may continue tomorrow, with the AI giant having been hit with a subpoena from the US Department of Justice relating to anti-trust issues after market close.

The other two macro tailwinds hitting the ASX 200 and international stocks are blowing out of China and the US.

Chinese residential and factory activity remains in the doldrums. And in the US, the Institute for Supply Management reported that manufacturing activity in the world's top economy declined again in August.

That's not only hitting tech stocks.

Amid lower demand concerns and with stalled Libyan crude production now expected to come back online, the Brent crude oil price dropped 4.7% overnight to US$73.75 per barrel.

That sees the Woodside Energy Group Ltd (ASX: WDS) share price down 2.2% in morning trade, while Santos Ltd (ASX: STO) shares are down 2.5%.

The iron ore price retreat also continued overnight, with the steel-making metal falling another 3.5% to US$93.45 per tonne.

That sees Fortescue Ltd (ASX: FMG) and BHP Group Ltd (ASX: BHP) also dragging on the ASX 200 performance today.

Fortescue shares are down 8.4% today, with the miner also trading ex-dividend today. BHP shares are down 1.6%.

Which could all be setting investors up for some fantastic bargain prices in the days ahead.

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

More on Share Market News

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Ord Minnett says this ASX 200 stock can rise 40%

Big returns could be on offer with this top stock.

Read more »

comical investor reading documents and surrounded by calculators
Broker Notes

6 ASX shares at 52-week lows: Buy, hold, or sell?

The market finished lower on Thursday as the conflict in Iran dragged on.

Read more »

A girl sits on her bed in her room while using laptop and listening to headphones.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing session for the markets this Thursday.

Read more »

Man going down a red arrow, symbolising a sliding share price.
Record Lows

This ASX retail giant's shares just hit a record low. What's going on?

Ongoing margin pressure keeps Endeavour shares near record lows.

Read more »

A wine technician in overalls holds a glass of red wine up to the light and studies it.
52-Week Lows

Treasury Wine shares just tumbled to 14-year lows. Screaming bargain or falling knife?

Trading at 14-year lows, are Treasury Wine shares poised for a rebound?

Read more »

A worried woman sits at her computer with her hands clutched at the bottom of her face.
Share Fallers

These 3 ASX 200 shares have hit fresh multi-year lows: Buy, sell or hold?

One of these stocks has crashed over 50% over the past year alone.

Read more »

Business people discussing project on digital tablet.
Broker Notes

Buy, hold, sell: Breville, Collins Foods, and MA Financial shares

Let's see if analysts are bullish or bearish on these names.

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Share Gainers

Why Catapult, DroneShield, Infratil, and Qoria shares are charging higher today

These shares are having a good session on Thursday. But why?

Read more »