Why did the ASX 200 dive to a near six-month low last week?

Consumer staples was the only ASX 200 market sector to finish in the green amid a highly volatile week, rising just 0.03%.

The S&P/ASX 200 Index (ASX: XJO) experienced significant fluctuations last week.

The US market wobbled and the ASX 200 followed suit, hitting a near six-month low before closing 2.52% lower for the week.

Bell Potter described a “sharp derating” of tech stocks, with the sector the worst performer of the week.

Tech shares fell 4.07% amid persistent fears of an artificial intelligence (AI) bubble.

Additionally, both the technology and financials sectors fell to six-month lows as expectations of a US interest rate cut faded.

Australian wages and jobs data released last week did nothing to change expectations that our cash rate will stay on hold as well.

The markets are currently pricing a 6% chance of a rate cut in December, and Betashares chief economist David Bassanese said the “benign” wages and jobs data “should not shift the needle significantly either way regarding the RBA outlook for interest rates”.

Bell Direct market analyst, Sophia Mavridis described last week’s volatility:

… the Australian share market dropped to a near six-month low before rebounding.

The benchmark ASX 200, which lost around $220 billion dollars in cumulative value over the last four weeks, found critical support after a week of global uncertainty.

Now, the drop was driven by mounting concerns over lofty technology valuations and a general global risk-off mood ahead of key US earnings.

However, the mood shifted following a blowout earnings report from us chip giant Nvidia, which eased the global fears of an impending AI bubble pop and sparked a major relief rally …

However, that relief rally on Thursday was short-lived, with fear returning to the market on Friday and ASX 200 shares falling 1.59%.

ASX 200 still expensive, says fundie

Over the past month, the ASX 200 has fallen by more than 7% after hitting a record of 9,115.2 points in mid-October.

Despite the fall, experts say the market is still expensive.

Blackwattle Investment Partners said the ASX 200 is trading on a 21x forward price-to-earnings (P/E) ratio.

This compares to a 10-year average of about 16x.

Consumer staples shares led the ASX sectors last week

Amid the volatility, it was fitting that consumer staples, one of the market’s most defensive sectors, came out on top.

The share price of the sector’s largest company, Woolworths Group Ltd (ASX: WOW), fell 0.57% to $28.08.

Coles Group Ltd (ASX: COL) shares rose 0.54% to $22.43.

The A2 Milk Company Ltd (ASX: A2M) share price rose 1.52% to $9.36.

The share price of liquor retailer and hotels owner Endeavour Group Ltd (ASX: EDV) fell 0.27% to $3.66.

The ASX 200’s largest pure-play wine share, Treasury Wine Estates Ltd (ASX: TWE) fell 3.12% to close at a 52-week low of $5.58.

IGA network owner Metcash Ltd (ASX: MTS) fell 2.08% to $3.76 per share.

ASX 200 agriculture share Graincorp Ltd (ASX: GNC) recovered 5.76% to close at $8.45 apiece.

This followed a near-10% fall the week before after the company’s FY25 report disappointed investors.

Bega Cheese Ltd (ASX: BGA) shares fell 0.51% to close at $5.90 on Friday.

The Elders Ltd (ASX: ELD) share price lifted 8.61% to $7.57 on the back of a strong FY25 report released on Tuesday.

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:

The post Why did the ASX 200 dive to a near six-month low last week? appeared first on The Motley Fool Australia.

More reading

• 2 of the best ASX dividend shares to buy for dependable passive income
• Age Pension worries? 7 income stocks to consider for retirement
• How to make $50,000 of passive income a year from ASX shares
• Here’s the average Australian superannuation balance at 60
• How to turn small weekly savings into life-changing wealth with ASX shares

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 positions in and has recommended Nvidia. The Motley Fool Australia has positions in and has recommended Treasury Wine Estates and Woolworths Group. The Motley Fool Australia has recommended Elders and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.