ASX fundamentals underwhelming: The broad fundamentals of the market support this notion if the trading activity in the ASX 200's most weighty constituents is assessed. The top-down themes that pushed the index to decade long highs this year proved some combination of the rejuvenation of the global growth story, the strong global appetite for riskier momentum/growth stocks, and finally sporadic (and fleeting) recoveries in the major bank stocks. Assuming these themes have become exhausted, given the beneficiaries of this dynamic have predominantly been the highly weighted financial, mining (which, as an aside, could find its feet again if the bull market in iron ore continues) and healthcare stocks, it stands to reason that a wash out in the Australian equity market is due and the ASX 200 still has scope to fall.
Wall Street’s impact on ASX: On the idiosyncratic behaviour of the ASX 200, it's easy but all too simplistic to entirely conflate its fortunes with that of Wall Street's. The correlation is strong, as it always is, no doubt; however, the Australian share market's correction is at a different and more mature phase than its US counterpart. To emphasise: it's what is making investors nervous and the bears hungrier: technical indicators are suggesting that the formation of bearish patterns in prices are emerging. It appeals to the notion that Wall Street indices are beginning to converge with the rest of the world, and being dragged nearer the bear market realm occupied by equities across the Asian and European regions.