The ASX 200 (ASX: XJO) is down 1.26% at the time of writing after some news out of the United States.
The S&P / ASX 200 is an index put together by Standard & Poor’s and generally measures the performance of 200 of the biggest businesses on the ASX. Some of the biggest businesses within the index are Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL) and Westpac Banking Corp
Why Is The ASX 200 Down?
Australian share markets generally follow what’s going on in international markets in the short term, which is exactly what’s happening today. The S&P 500 Index (INX) dropped 1.2% yesterday after American manufacturing numbers were released.
Some investors like to look at GDP numbers and manufacturing numbers could be an even better indicator of near term economic conditions.
According to numbers out of the US, the manufacturing figures were at the lowest level since the GFC as the trade war is starting to filter through to the American economy.
The reported number was 47.8 last month, down from 49.1 in August. If the number is below 50 then it suggests manufacturing is contracting and if it’s above 50 then manufacturing is growing.
Australia’s businesses are not fundamentally worth over 1% less than they were yesterday, but that’s how the buying and selling on share markets work.
Some investors may feel they’re being smart by getting out before the market falls too heavily. Whereas buyers may believe this is an opportunity to buy at a lower price.
If the USA can make a trade deal with China then share markets could bounce higher, although it may be too late to stop a recession by that point. The USA and China are two of Australia’s biggest partners, so what goes on between them is important.
You never know what the next news cycle is going to bring, so it may be a good idea to stick to investing in defensive and relatively safe businesses like the ones revealed for free in the report below.
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