The ASX200 is officially in a technical correction... here's what that actually means.
👉 Background: The ASX200 is the index that tracks the largest 200 listed companies in Australia. It’s generally used as a reference point to measure the combined performance of these companies’ share prices.
👉 What happened: When COVID hit in March 2020, the ASX200 experienced a 'uge decline. We're talkin' around 33%. It recovered… but after a rocky few months, the ASX200 is back on a downward spiral.
👉 What else: The ASX 200 plunged more than 5% yesterday, marking the worst loss since March 2020. This move has sent the index into a correction, just after Wall Street's S&P500 officially entered a bear market.
💡Market correction and bear market are both terms used to describe periods of decline in the stock market, but they're not interchangeable.
💡 The main difference is that a correction happens when the market drops at least 10% from its most recent high. A bear market is when the market drops 20% within at least two months or more. The ASX has lost 13% of its value since its market high in April, so it's in a correction.
💡The other thing to remember is that particular industries can also enter corrections, like the tech industry or financials. On the other hand, bear markets tend to just happen to the market overall.
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