ASX 200 Weekly Wrap: ASX bears take control as market volatility returns

What a week… The S&P/ASX 200 Index (ASX: XJO) stunned investors last week with a wild ride that saw market volatility return in a rather dramatic fashion.

After a six-week streak of gains, the ASX 200 has now broken that run, diving decisively back below the 6,000-point milestone that it had only re-conquered in the week prior.

Market giddiness over the continuing relaxation of coronavirus restrictions helped the ASX 200 steam towards 6,200 points over Tuesday and Wednesday. But Thursday and Friday saw a marked shift in sentiment, and by the end of the week, the ASX 200 was back firmly below 5,900 points. This shift was likely sparked by the United States Federal Reserve, which issued some pessimistic economic updates mid-week. This included a prediction that the US unemployment rate would likely remain over 9% for the rest of the year, as well as an estimate that American Gross Domestic Product (GDP) would decline by up to 6.5% in 2020.

These unfavourable numbers broke the back of the ASX run on Thursday and Friday and resulted in the market recording its first week in the red since April.

Once again, it was the ASX bank shares that were the major market movers last week. All four of the 'majors' were giving investors whiplash. But the most volatile was Australia and New Zealand Banking Group Limited (ASX: ANZ). The ANZ share price was up nearly 7% from the prior Friday's close by Tuesday afternoon, yet ended the week more than 4% lower off the same benchmark by Friday afternoon. Talk about a roller-coaster!

How did the markets end the week?

As mentioned, it was certainly a week of extremes for ASX shares, despite the shorter than normal trading week. Tuesday saw a robust gain of 2.4% for the ASX 200. Wednesday brought the first signs of volatility when the market recovered from an early dip to end the day up 0.06%. Then came Thursday and Friday with respective 3.1% and 1.89% falls. It could have been a lot worse too. After market open on Friday, the ASX 200 was down 3.4% at one point, but a late rally saw the ASX 200 closing at 5,847.8 points – cementing the week's loss at 2.5%.

Meanwhile, the All Ordinaries (INDEXASX: XAO) also had a nasty week – starting off at 6,116.5 points and ending 2.3% lower at 5,959.9 points.

Which ASX 200 shares were the biggest winners and losers?

Let's now have a look at which ASX 200 shares were the week's biggest winners and losers on the Foolish gossip pages. As usual, let's start with the losers:

Last week's ASX 200 wooden spoon goes to Unibail-Rodamco-Westfield – an ASX 200 share that can't seem to keep itself off the losers list for more than a few weeks these days. The week's slump appears to be a consequence of the European-based REIT getting kicked out of the ASX 100 index come 22 June. Traders appear to be getting in ahead of the index rebalancing and jettisoning their URW shares.

Estia Health suffered the same problem last week when it was revealed it would no longer be a part of the ASX 200 in a fortnight's time.

Meanwhile, Southern Cross Media dropped despite no major obvious catalyst. This share is so volatile that investors don't even seem to need a reason for piling in or out anymore.

And subdued demand and prices in the lithium market continue to weigh on Orocobre and other producers.

With the losers out of the way, let's now take a look at last week's winners:

Last week's crown goes to IPH, a company that provides intellectual property services. IPH announced a major acquisition in New Zealand which investors obviously approved of.

It's not often that an ASX blue chip makes the winners or losers list, but we have two here.

Coca-Cola Amatil shares were in demand last week. Investors seem to have decided this drinks giant might have been slightly oversold after its woes during the coronavirus lockdowns.

The ASX's largest gold miner Newcrest also made the cut last week. Gold prices rebounded strongly late last week as investors got cold feet. Newcrest also announced a positive update regarding output at 2 of its mines, which also added to investors' goodwill.

What is this week looking like for the ASX 200?

After last week, who the heck knows!

The markets will have to weigh up the positivity of the continuing Australian coronavirus success story (touch wood) against any further negative sentiment that comes out of the US markets. After falling more than 6% on Thursday, the US Dow Jones Industrial Average recovered 1.9% on Friday. Whether this positive sentiment continues this week will likely play a large part in determining how the ASX pans out, in my view.

So before we get going on yet another week in this crazy town, here's a snapshot of how the major ASX blue chips are looking:

And finally, here is the lay of the land for some leading market indicators:

•     S&P/ASX 200 (XJO) at 5,847.8 points
•     All Ordinaries (XAO) at 5,959.9 points
•     Dow Jones Industrial Average at 25,605.54 points
•     Gold (Spot) swapping hands for US$1,7308.80 per troy ounce
•     Iron ore asking US$103.59 per tonne
•     Crude oil (Brent) trading at US$39.04 per barrel
•     Crude oil (WTI) going for US$36.56 per barrel
•     Australian dollar buying 68.62 US cents
•    10-year Australian Government bonds yielding 0.90% per annum

Foolish takeaway

Last week brutally proved that sentiment can turn on a dime and complacency in this market can be swiftly punished. At this point, I think all ASX investors should continue to hope for the best, but be prepared for the worst.

So let's all hope for a resumption in positivity for the ASX 200 this week. But I would also urge you to have a think about how you might react if things get worse from here for ASX 200 shares. Having a game plan can help you to avoid emotional pitfalls that so often cripple a good investing portfolio. As always, fellow Fools, stay safe, stay rational and stay Foolish!