ASX 200 rallies from June lows. Is the worst over?

What a difference a few days can make.

After falling to its lowest level since June on Friday, the S&P/ASX 200 Index (ASX: XJO) has bounced back on Monday.

The benchmark is currently up 0.46% to around 8,705 points, with the major banks helping drive the recovery.

It's a welcome change after another difficult week, which saw the ASX 200 finish Friday at 8,665 points after falling as low as 8,639 points.

The index is still down around 3.7% over the past month, so there's plenty of ground to make up.

But the next few days could determine whether today's rebound has further to run.

Here's what's happening.

Banks lead the way

A big part of today's recovery is coming from the banks, with all four major lenders trading higher.

Commonwealth Bank of Australia (ASX: CBA) shares are up 0.92% to $152.21, while National Australia Bank Ltd (ASX: NAB) has climbed 1.97% to $39.30.

It's a similar story elsewhere, with Westpac Banking Corp (ASX: WBC) up 1.45% to $34.99 and ANZ Group Holdings Ltd (ASX: ANZ) gaining 1.71% to $38.485.

Macquarie Group Ltd (ASX: MQG) is also having a good session, rising 2.16% to $244.70.

Healthcare is lending a hand as well, with CSL Ltd (ASX: CSL) shares climbing 2.18% to $180.80.

But despite the ASX 200 moving higher, it's actually a fairly mixed session across the market.

At the latest check, 95 stocks are rising, while 101 are falling and 4 remain unchanged.

Northern Star takes off

Away from the banks, one of Monday's biggest movers is Northern Star Resources Ltd (ASX: NST).

The gold miner's shares are up 7.69% to $23.81 after rejecting a takeover approach from South African giant Gold Fields.

That hasn't been enough to lift the rest of the mining sector, however.

BHP Group Ltd (ASX: BHP) shares are down 0.63% to $60.34, while Rio Tinto Ltd (ASX: RIO) has fallen 1% to $163.21.

Several other gold miners are also moving lower as the gold price retreats.

Evolution Mining Ltd (ASX: EVN) shares are down 2.15% to $13.65, and Newmont Corporation (ASX: NEM) has dropped 2.74% to $123.93.

What happens next?

Monday's rebound is encouraging, but the biggest test for the ASX 200 will come over the next few days.

The RBA will announce its latest interest rate decision tomorrow, with economists widely expecting another 25-basis-point increase.

That would take the cash rate to 4.60% and mark the fourth rate hike this year.

Investors will then turn their focus to Wednesday's inflation figures, which should provide another update on where prices are heading.

For me, the key level to watch is 8,600 points, with Friday's low providing a useful reference for the market's recent weakness.

If the benchmark can hold above that level, it could give investors some confidence heading into October.

The post ASX 200 rallies from June lows. Is the worst over? appeared first on The Motley Fool Australia.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Macquarie Group. The Motley Fool Australia has recommended BHP Group, CSL, and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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