The Commonwealth Bank of Australia (ASX: CBA) share price has been crashing lower in recent days. Concerns over COVID-19 have hit global markets hard and sparked an all-out response from governments and central banks around the world. That hasn't stopped investors from selling down their shares though, and the Aussie banks have been hit hard.
Why is the CBA share price being hammered lower?
Commonwealth Bank shares closed at $59.72 per share yesterday, down 26.97% since the start of March. That's a pretty spectacular decline from one of the biggest ASX 200 shares on the market. Shares in the Aussie bank have been squeezed by both COVID-19 concerns and the recent RBA rate cut.
The banks are under pressure due to the potential business impacts from the global pandemic. If businesses are forced to shutdown, that could mean they default on their loans to the banks and potentially go under. There's also the chance that unemployment rises as people get laid off to save on expenditures. All of this points to the asset quality of the banks like CommBank, which could fall lower.
On top of COVID-19 concerns, the recent RBA rate cut could squeeze profit margins. Lower interest rates for customers mean lower earnings which should decrease the market value of CBA shares. These 2 factors have seen the bank's share price fall from a 52-week high to 52-week low in the space of a few weeks, with CBA shares experiencing bigger and bigger movements in recent days.
Which way are Commonwealth Bank shares headed today?
The movement of CommBank shares can have a huge impact on which way the S&P/ASX 200 Index (ASX: XJO) goes in a given day. Given I don't have a crystal ball, I'm not sure where Commonwealth Bank shares are headed today. However, further government stimulus and monetary bank support should be a big positive for bank shareholders.
Whatever happens today, I don't think investors should be scared of bear markets. While I may not be piling into troubled sectors and buying ASX travel shares, there are a number of other good cheap ASX shares to consider. In fact, now could be the best time to buy your favourite ASX shares for an absolute bargain.
