Can I have some cheese with my market dip please?

XJO (TOP 200) Australian Market Index Update, for August 16, 2024.

by Dr Jo

Aussie Market Movements

Last week, the Australian market experienced a significant dip, with a sharp 3.7% decline on Monday, August 5th, wiping out over $100 billion.

Last week's market dip was a classic case of systemic risk in action. When over-leveraged traders tangled with the Japanese Yen and got caught off guard, it sent shockwaves through the market.

However, the market quickly rebounded, recovering all losses and more!

This domino effect showed just how tightly our financial systems are connected, with one slip causing a chain reaction.

Watch the full market explainer below.

Understanding Crashes, Corrections, and Dips

Market declines can be categorized based on their severity: a dip is a minor decline of less than 10%, a correction is a drop between 10% and 20%, and a crash is a more severe decline of 20% or more.

Dips like the one we saw last week are relatively common and usually short-lived, unlike full-blown crashes, which can have lasting effects on portfolios and economies.

Historical Perspective: Past Market Crashes

Historically, October is notorious for market crashes, with Black Monday in 1987 and the Wall Street crash of 1929 being the most famous examples. The 1987 crash saw global markets plummet by over 20% in a single day, while the 1929 crash led to the Great Depression.

Despite these historical events, the dip on our market last week was just that—a dip, not a crash. So, while it’s always wise to stay informed, there’s no need to panic. Let’s have some cheese with the dip, please!

For more essential content, visit our team at: marketmonkey.com.au

-- Market Monkey Team. Boring stuff, made unboring.