Is the ASX 200 on the verge of a market correction?

Here's how close we are to a market correction after another horror week.

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ASX 200 utilities shares led the market sectors last week with a 3.23% gain over the five trading days.

Meantime, the S&P/ASX 200 Index (ASX: XJO) fell to seven-month lows as US tariffs entrenched fear and uncertainty into the markets.

Overall, the Australian benchmark index fell 1.99% over the week to finish at 7,789.7 points on Friday.

The ASX 200 is, indeed, teetering on the edge of an official market correction.

A male investor sits at his desk pondering at his laptop screen with a piece of paper in his hand.

Image source: Getty Images

What is a stock market correction?

A market correction is defined as a major index falling 10% from its most recent peak.

The ASX 200 peaked at a closing value and all-time record high of 8,555.8 points on 14 February.

It's down 8.95% since then, so we are very close to a technical market correction.

In fact, just one more poor day of trade could take us there.

The US benchmark index, the S&P 500 Index (SP: .INX), officially entered a market correction on Thursday night.

The S&P 500 closed at 5,521.52 points on Thursday, down 10.13% from its all-time high of 6,144.15 points on 19 February.

The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) entered a market correction a week earlier.

At the time of writing, the NASDAQ is down 13.7% from its record peak of 20,056.25 points on 19 February.

What happened last week?

Fear and uncertainty surrounding how US tariffs will impact global trade and global economic growth continued last week.

We learned that Australia would not receive an exemption on a 25% tariff on steel and aluminium that came into effect on Thursday.

Australian Ambassador to the US, Kevin Rudd, and many Australian Government officials campaigned over many months in the US to get a carve-out given our long-standing friendship with the US, our defence partnership under AUKUS, and the US trade surplus with us.

Meantime, speculation in the US that tariffs will eventually flow through to US consumer prices and weaken demand, potentially leading to a recession, intensified last week.

This followed a TV interview with US President Donald Trump in which he predicted a "period of transition" as the tariffs were rolled out.

As a result, investors continued to sell down stocks in favour of safe-haven assets like gold.

The gold price lifted to a new record high above US$2,990 per ounce on Thursday.

The commodity's rise drove ASX gold shares higher and contributed to the materials sector remaining just inside the green for the week.

Last week, eight of the 11 ASX 200 market sectors finished in the red.

Let's re-cap.

Utilities shares led the ASX sectors last week

Just 22 companies make up the ASX 200 utilities sector.

Here's how the six biggest shares by market capitalisation performed.

AGL Energy Limited (ASX: AGL) shares lifted 5.36% over the five trading days to close at $10.62 on Friday.

Origin Energy Ltd (ASX: ORG) shares rose by 1.81% to $10.38 over the week.

APA Group (ASX: APA) shares increased by 4.57% to $7.67.

Mercury NZ Ltd (ASX: MCY) shares fell by 4.66% to $5.11.

Meridian Energy Ltd (ASX: MEZ) shares lifted by 0.81% to $4.98.

Genesis Energy Ltd (ASX: GNE) shares rose by 1.49% to $2.05.

ASX 200 market sector snapshot

Here's how the 11 market sectors stacked up last week, according to CommSec data.

Over the five trading days:

S&P/ASX 200 market sectorChange last week
Utilities (ASX: XUJ)3.23%
Materials (ASX: XMJ)0.51%
Energy (ASX: XEJ)0.08%
A-REIT (ASX: XPJ)(0.21%)
Consumer Staples (ASX: XSJ)(1.43%)
Communication (ASX: XTJ)(2.62%)
Industrials (ASX: XNJ)(2.69%)
Financials (ASX: XFJ)(3.14%)
Consumer Discretionary (ASX: XDJ)(3.28%)
Healthcare (ASX: XHJ)(3.53%)
Information Technology (ASX: XIJ)(4.35%)

Motley Fool contributor Bronwyn Allen 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 positions in and has recommended Apa Group. 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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