3 reasons why the ASX 200 tumbled on Thursday

Thu 01 Sep 22, 2:05pm (AEDT)
Down 8 Red Crash
Source: iStock

Key Points

  • The ASX 200 is having its worse day since 30 June
  • BHP shares went ex-dividend for a yield of approximately 6.25%
  • Banks are under pressure amid a decline in new loan commitments and falling home prices

The ASX 200 tumbled -2.0% on Thursday afternoon to a 1-month low, with the seasonally troublesome month of September living up to expectations.

The sharp decline reflects a few heavyweight stocks and sectors posting notable declines, which we'll discuss below.

BHP goes ex-dividend

BHP (ASX: BHP) shares went ex-dividend on Thursday for a final dividend of US$1.75 (A$2.55).

Based on Wednesday's close of $40.60, that's a dividend yield of approximately 6.25%.

It's worth noting that since BHP's unification with its London shares, the company's weighting in the ASX 200 has risen from 6.2% to around 10%.

BHP shares hit session lows of around -7.9% shortly after open, which would account for more than a third of the benchmark decline.

Banks roll over

The Big 4 Banks added further insult to injury, all down around -2% at noon.

The Australian housing market is truly starting to roll over, with CoreLogic's home value index down -1.6% in August, the biggest national monthly decline since 1983.

"We are expecting to see less buying activity as higher interest rates and low sentiment continue to weigh on demand," said CoreLogic's research director, Tim Lawless.

“As borrowing power is eroded by higher interest rates and rising household expenses due to inflation, it’s reasonable to expect a further decline in consumer confidence and lower housing demand," he added.

This was further evidenced by ABS data on Thursday, which flagged an -8.5% month-on-month decline in new loan commitments for housing in July.

Lending indicators, July 2022 Australian Bureau of Statistics
Source: Australian Bureau of Statistics

Rate sensitive sectors struggle

Sectors typically bought for stable dividends like real estate and utilities are also leading to the downside.

The ASX 200 Real Estate and Utilities Indexes are both down more than -2% at noon, weighed by heavyweight names like Goodman (ASX: GMG), Scentre Group (ASX: SCG) and AGL Energy (ASX: AGL).

Global bond yields have started pushing higher again after hitting a peak around June. The Australian Government 2 and 10 year yields currently sit at 3.2% and 3.7%.

To add some perspective, the average market cap weighted dividend yield for the All Ords is 4.45%.

Australia government 2 year yield
Australia 2 year government bond yields (Source: TradingView)


Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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