What a disastrous start to the trading week for ASX investors it was yesterday. After leaving the S&P/ASX 200 Index (ASX: XJO) last week on a dispondent note (down 0.11% to 8,630.8 points), investors seem to have come back from the weekend in an even fouler mood.
The ASX 200 opened at just 8,577.9 points yesterday morning and just kept on falling as the day unfolded. By the time the markets had closed, the index was sitting at 8,505.3 points, down a nasty 1.45%, after getting as low as 8,500.2 points during intra-day trading.
This latest drop means that the ASX 200 has now lost about 5% of its value over the past month alone. The index is also sitting on a year-to-date loss of 2.55%, and is down by roughly 7.6% since early March.
We haven't seen the index at 8,500 points since the end of March, meaning the Australian share market is now at a seven-week low.
So what's going on here?
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Why is the ASX 200 at a seven-week low today?
Well, with 200 stocks making up the overall ASX 200 Index, it can be hard to pinpoint exact catalysts for its performance. However, we can note a few relevant factors here.
Generally speaking, there is no doubt that the ongoing Iran War is weighing on investors' confidence. Despite endless back and forths, the Strait of Hormuz remains closed to most maritime traffic. That in turn means that oil is still facing a severe supply shock.
The markets arguably spent most of April assuming that the Strait wouldn't be shut for long. Perhaps the realities of a potentially prolonged supply squeeze are settling in. Closer to home, the recent federal budget also seemed to have a depressing effect on the share market. Since last Tuesday night, the ASX 200 has fallen every session, bar one, and has lost 1.9% of its value. That could be a coincidence, of course. But numbers don't lie.
The other factor that is probably pushing the ASX 200 to its seven-week lows this week is the performance of some individual ASX shares. The ASX 200 forest is made up of 200 ASX stock 'trees', if you'll pardon the metaphor. We've seen some fairly consequential moves from a few of the trees over the past week.
CSL and CBA weigh down the index
For one, there was the 10% drop in the Commonwealth Bank of Australia (ASX: CBA) share price last week. Just before that, CSL Ltd (ASX: CSL) had almost 16% of its value wiped out in one session.
These two companies are top ten ASX 200 stocks (or at least were in CSL's case). As such, moves of this nature are more than enough to have an impact on the broader index. Although a smaller stock, yesterday's 62.8% crash for Tuas Ltd (ASX: TUA) shares wouldn't have helped matters either.
Let's see how this Tuesday, and the rest of this week, treat the Australian markets.
