ASX 200 dives to a 6-week low. What's behind today's sell-off?

Investors are facing another rough session as selling gathers pace.

The S&P/ASX 200 Index (ASX: XJO) is having a rough Thursday.

At the time of writing, the benchmark index is down 1.68% to 8,762 points, pushing it to its lowest level in around 6 weeks.

The fall also leaves the ASX 200 roughly 5.7% below its record high of 9,296 points reached in early August. Over the past month alone, the index has fallen more than 5%.

The selling is also spread right across the market. At the latest check, 153 shares are falling, 36 are rising and 11 are unchanged.

If the current decline holds into the close, it would also be the ASX 200's worst session in around 3 months.

Woman looking at stock market numbers.

Image source: Getty Images

Oil above US$100 rattles investors

One of the biggest concerns today is the jump in oil prices.

Brent crude is currently at US$101.60 a barrel, as tensions involving the US and Iran continued to push energy prices higher.

Higher oil prices are adding to inflation concerns, which is pushing bond yields higher and making the outlook for interest rates less comfortable.

The US 10-year Treasury yield climbed to around 4.84% overnight, its highest level since 2023, while Australian bond yields have also moved higher.

Markets are now pricing around a 70% chance of another Reserve Bank of Australia rate hike at its 29 September meeting.

Heavyweights are getting hit

The weakness is spread across the market, with every sector trading lower earlier on Thursday.

Mining stocks are doing plenty of damage after iron ore slipped back below US$100 a tonne.

BHP Group Ltd (ASX: BHP) shares are down 2.81% to $62.77, while Rio Tinto Ltd (ASX: RIO) shares have fallen 3.03% to $173.90.

The banks are also lower, with Commonwealth Bank of Australia (ASX: CBA) shares down 1.71% to $152.60 and National Australia Bank Ltd (ASX: NAB) shares falling 1.91% to $37.54.

What should investors watch now?

One level worth watching is the ASX 200's 200-day moving average, which was sitting around 8,816 points before the market opened.

The index has now dropped below that level, which could put more attention on the 8,800 area after the strong breakout above 9,000 in August failed to hold.

The next few sessions are likely to depend heavily on oil prices, bond yields and the upcoming US inflation data.

The ASX 200 is still slightly higher in 2026, so I wouldn't call this a major correction yet.

But with the index now 5% below its August record high, investors should expect more short-term volatility.

Motley Fool contributor Aaron Teboneras 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 recommended BHP 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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