Every sector on the ASX has wound up in the red on Friday …
The post What is weighing the ASX share market down today? appeared first on The Motley Fool Australia. –
The ASX share market is struggling today as the S&P/ASX 200 Index (ASX: XJO) seals its first monthly decline since September 2020.
It appears Wall Street has paved the way for today’s sharp decline, with its major indices opening slightly higher before fading heavily by market close.
The S&P 500 Index (SP: .INX), Dow Jones Industrial Average Index (DJX: .DJI) and Nasdaq Composite Index (NASDAQ: .IXIC) all closed near session lows, down 1.19%, 1.59% and 0.44% respectively.
At the time of writing, the ASX 200 is down 2.11% at 7177 points. Let’s look at some of the factors that might be weighing the market down today.
Why the ASX share market is struggling to bounce
Interest rate hikes on the horizon
The US Federal Reserve signalled last week that it may begin raising the benchmark interest rate in late 2022.
Equity markets, more notably tech and richly valued growth shares have thrived under ultra-low interest rates.
With potential looming interest rate hikes on the horizon, investors have been quick to rotate away from these sectors.
In the last week, the S&P/ASX Information Technology (INDEXASX: XIJ) and S&P/ASX Health Care (INDEXASX: XHJ) have logged hefty declines, tumbling 6.41% and 6.09% respectively.
Iron ore woes continue
ASX 200 iron ore heavyweights BHP Group Ltd (ASX: BHP), Fortescue Metals Group Ltd (ASX: FMG) and Rio Tinto Limited (ASX: RIO) have weighed on the broader commodities sector as iron ore plunged from May all-time highs of US$230 a tonne to around US$120 a tonne this week.
The iron ore majors continue to bleed amidst weak economic data from China, with all three iron ore majors falling between 2.4% and 3.5% on Friday.
Lending indicators plateau
Australia’s lending indicators for new borrower-accepted finance commitments for housing doubled between March 2020 lows and June 2021.
But the once bullish lending indicators might have hit a near-term top with the latest figures from the Australian Bureau of Statistics (ABS) signalling a broad pullback in new loan commitments.
New borrower-accept loan commitments for housing declined 4.3% month-on-month while personal fixed-term loans also declined 2.5%.
This might also be a reason why the Commonwealth Bank of Australia (ASX: CBA) share price has plunged 4.29% to $98.85 at the time of writing.
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Motley Fool contributor Kerry Sun 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.