Less than a month ago, the S&P/ASX 200 Index (ASX: XJO) was trading as high as 9,282 points.

Today, it is sitting at 8,901 points.

That is a fall of more than 380 points from its August peak, with the index now down around 1.8% over the past week and almost 4% over the past month.

Wednesday has added a little more pressure, with the ASX 200 down 0.22% at the time of writing after briefly falling to 8,888 points earlier in the session.

The move comes after Tuesday’s 1% slide, which pushed the market to its lowest closing level in 6 weeks.

A 4% pullback is hardly a crash, but the benchmark index has clearly lost some momentum.

So, is this becoming a more serious sell-off?

Interest rates are back in focus

One of the biggest concerns is interest rates, with investors facing the possibility that the RBA may not be finished hiking just yet.

The Reserve Bank lifted the cash rate to 4.35% in August, its third increase of 2026, and comments from senior officials this week have kept another move on the table.

Deputy Governor Andrew Hauser said on Tuesday that inflation remains “too high” and questioned whether the rate increases delivered so far would be enough.

Assistant Governor Sarah Hunter also said the board may need to lift rates again if inflation turns out to be stronger than expected.

That could weigh on companies that are more sensitive to interest rates and changes in consumer spending.

Oil prices are another issue, with Brent crude recently pushing towards US$100 a barrel as the conflict in the Middle East continues.

The selling is fairly widespread

It is not just a handful of large companies pulling the market lower either.

At the time of writing, around 120 ASX 200 shares are in the red, compared with 72 trading higher and 8 unchanged.

The major banks are among the biggest drags. Commonwealth Bank of Australia (ASX: CBA) shares are down 2.35% to $154.96, while National Australia Bank Ltd (ASX: NAB) shares have fallen 1.79% to $38.18.

Meanwhile, Westpac Banking Corp (ASX: WBC) shares are down 1.26% to $34.15 and ANZ Group Holdings Ltd (ASX: ANZ) shares are 0.43% lower at $36.78.

There is some support coming from the resources sector, with higher commodity prices helping several of the market’s biggest miners.

BHP Group Ltd (ASX: BHP) shares are up 2.29% to $63.98, while Rio Tinto Ltd (ASX: RIO) shares have climbed 2.03% to $179.58.

Is the sell-off serious?

At this stage, I wouldn’t call a 4% fall a serious correction.

The ASX 200 is still up around 2% in 2026, and some of today’s weakness comes from several large companies trading ex-dividend.

Those dividends are taking around 8.4 points off the index today, so not all of the decline reflects actual selling.

The post The ASX 200 is down nearly 4% in a month. Is the sell-off getting serious? appeared first on The Motley Fool Australia.

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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.

A little over a week ago, Xero Ltd (ASX: XRO) shares were trading above $89.

Today, investors can pick them up for $72.32.

The cloud accounting stock is down another 2.60% on Tuesday, extending its weekly fall to around 13% and wiping out most of its August rebound.

Xero shares have now fallen roughly 37% in 2026 and almost 55% over the past 12 months, having traded as high as $166 over the past year.

That’s a huge change in what investors are being asked to pay for the same business.

And while a falling share price doesn’t automatically make a stock cheap, Xero is getting to a level where I think it deserves another look.

So, has one of the ASX’s best-known growth stocks finally fallen far enough?

Let’s take a closer look.

Why are Xero shares falling again?

The strange part is that there hasn’t been a new earnings downgrade or major company announcement behind this week’s fall.

Xero’s latest updates have mainly been substantial shareholder notices, while its FY26 result was actually pretty solid.

Revenue rose 31% to NZ$2.75 billion, annualised monthly recurring revenue climbed 37% to NZ$3.27 billion, and subscribers increased 11% to 4.92 million.

The problem is that investors are looking past those numbers and focusing on the risks.

Melio integration costs helped push net profit down 27% to NZ$167.4 million, while gross margin fell from 89% to 83.9%.

There are also questions around what AI could mean for software businesses and whether higher interest rates will keep pressure on growth stocks.

So, I don’t think this week’s decline is about one bad piece of news.

It just looks more like investors are still asking how much they should be willing to pay for Xero’s future growth.

Would I buy Xero shares?

At $72.32, I think Xero’s valuation is starting to look a lot more reasonable.

Morningstar’s quantitative valuation puts fair value at $102.60 per share, which is around 42% above the current price.

Of course, a valuation estimate is not a guarantee. Investors still need to watch Melio integration costs, margins, and whether AI changes the competitive landscape faster than expected.

But Xero still has nearly 5 million customers and plenty of room to grow internationally.

I would expect the share price to remain volatile in the short term.

But if I was investing with a 3-to-5-year view, I think Xero is starting to look like good value again.

The post Down 13% in a week: Is the Xero share price finally cheap enough to buy? appeared first on The Motley Fool Australia.

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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 positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I’ve written before about one of the most useful questions in economics and investing.

It’s only three words:

And then what?

Warren Buffett has used the phrase in exactly that context. The point is simple: the first consequence of a decision is usually obvious. The second, third and fourth are where things get interesting.

One Nation’s new Superannuation proposal is a near-perfect example.

(Please put your political views – for or against – aside for a minute; this is about economics.)

The policy would allow eligible renters and mortgage holders to redirect 3 percentage points of the 12% compulsory Super contribution into take-home pay for up to three years.

First-order thinking says: more money in your bank account.

And, yes, that sounds good. Particularly when households are dealing with high mortgage repayments, rents and grocery bills.

But: and then what?

Some, probably most, of that money gets spent. More money chasing the same amount of goods and services adds to demand, and therefore to inflationary pressure.

And then what?

If inflation is stronger than it otherwise would have been, the Reserve Bank may have to keep interest rates higher for longer – or raise them further – eating into some (more) of the benefit.

And then what?

Three years later, the extra take-home pay disappears. But prices probably don’t fall. (When was the last time prices – other than maybe petrol or fruit & veg – fell?) 

Remember: Lower inflation doesn’t mean prices fall – just that they rise more slowly. So when that 3-year period expires, prices will be higher, but your take-home pay would be lower.

Oh, and the money diverted from Super wasn’t invested and compounding during that period!

The pollies aren’t wrong that people are doing it tough. It’s tempting to think a hand-out would solve that. But unfortunately, it’s not that easy. Because you have to ask and then what?

And the same is true in investing.

Imagine someone told you in 1974 that global air travel was going to increase roughly ten-fold over the following half-century.

They’d have been spectacularly right.

Global passenger journeys rose from about 421 million in 1974 to 4.27 billion in 2023.

You might reasonably have thought: “Bingo! I’ll buy shares in airlines.”

Except airlines have historically been terrible businesses.

They require enormous amounts of capital. They have high fixed costs. They’re exposed to fuel prices, recessions, wars, pandemics and regulation. And fierce competition has often meant much of the benefit from increasing demand has gone to passengers through cheaper fares rather than to airline shareholders through higher share prices and dividends.

Even today, peak body, the International Air Transport Association, expects the global airline industry’s return on invested capital to remain well below its cost of capital!

The prediction that more people will fly was right.

The investment results were… not good.

And then what?

We’ve seen something similar with lithium.

The first-order thesis was compelling: electric vehicles and battery storage are going to grow rapidly, therefore the world will need vastly more lithium.

Again, totally accurate.

But markets respond.

High lithium prices encouraged miners to expand existing projects, develop new ones and spend more on exploration.

Supply surged.

By 2024, lithium demand was around six times its 2015 level. Yet lithium prices had fallen back to around 2015 levels. The International Energy Agency says the huge increase in supply drove lithium prices down by more than 80% from their recent highs.

The demand thesis wasn’t wrong. It just ignored the subsequent actions and reactions.

“This technology will change the world” is interesting, but not an investment thesis.

“This industry will grow rapidly” is a forecast, not an investment thesis.

“This commodity will be needed in much greater quantities” is a good insight. But, no, not an investment thesis.

They’re very good starting points.

But you still need to ask what competitors will do. What suppliers will do. Whether new capacity will be added. Whether prices will fall.

Whether customers, suppliers or shareholders capture the benefits.
(And that’s before asking what the share price already accounts for!)

In other words:

And then what?

And then ask it again.

And again.

Because in economics, public policy and investing – in life in general, really – the first-order consequence is usually the easiest one to see. It’s the second, third and fourth that tend to get you. Or, more positively, that can provide opportunities.

Either way, the task is to think past just the initial impact.

To ask ‘And then what?’.

Fool on!

The post The most important question for investors appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips 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 Scott Phillips.