What to do as the ASX turns south

US markets lose more than 2% overnight, with the ASX set to follow

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Overnight US markets fell the most since November 2011, with the Dow Jones dropping 2.3% and the broader S&P 500 lost 2.5%. Commodities were sold off en masse, with gold sliding to US$1,275, its lowest level since September 2010 and silver falling below US$20 an ounce. The US dollar strengthened against most currencies, which saw the Aussie dollar dipping below 92 US cents.

European markets fared even worse, with the UK’s FTSE 100 sliding 3% and Germany’s DAX diving 3.3%.

The ASX SPI Futures indicate a fall of close to 2%, although yesterday’s 2% fall may limit some of the falls today.

For those investors that have recently been chasing yield, and jumping into the banks, Woolworths Limited (ASX:WOW), Wesfarmers Limited (ASX:WES), Telstra Corporation (ASX:TLS), falls in the share prices have all but wiped out any gains from dividend yields.

As we have repeatedly warned, we hope you avoided jumping on the bank/supermarket fully franked yield bandwagon. To say the wheels have fallen off is an understatement.

With the S&P / ASX 200 Index (Index:^AXJO) (ASX:XJO) likely to fall today, now is not the time to be dumping good quality stocks. Instead, pullbacks offer the opportunity to pick up good quality companies at ‘sale’ prices. In these volatile times, you never know what silly price some (lower-case ‘f’) fool might panic and sell out of what are perfectly good and growing companies.

And by that I don’t mean risky mining services companies or tiny, dodgy minerals explorers, in the hope of hitting the jackpot. That’s more akin to gambling than investing.

Companies with exposure to the recovering US economy, and set to benefit from the falling Aussie dollar are at the top of my watchlist, as are a whole host of Australian companies providing indispensable goods and services in the retail, healthcare, utilities and telecommunications sectors.

Foolish takeaway

In times of increased volatility, Foolish investors are being offered opportunities galore. Now is not the time to panic and sell out, but look for opportunities amongst Australia’s quality stocks.

In the market for high yielding ASX shares? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool writer/analyst Mike King owns shares in Woolworths and Telstra.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »