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Investors breathe a sigh of relief

The S&P/ASX 200 (^AXJO) (ASX: XJO) recovered significantly late in the week, following over a month of heavy market volatility. Dipping to 4,632.6 points on Tuesday – its lowest point in over six months – the market piled on a total of 170.3 points to finish trading on Friday at 4,802.6.

It was largely the defensive stocks that drove the market forward, following signs that the Chinese central bank was working toward halting the country’s liquidity crunch, which returned an ounce of confidence to the Australian market. This was supported by domestic fund buying prior to the end of financial year.

Telecommunications giant Telstra (ASX: TLS) gained 4.8% after its recent setback, whilst Commonwealth Bank (ASX: CBA), Westpac (ASX: WBC) and ANZ (ASX: ANZ) gained over 4% each. NAB (ASX: NAB) was the poorest performing bank for the week, but still gained 2.4%. Meanwhile, supermarket rivals Wesfarmers (ASX: WES) and Woolworths (ASX: WOW) saw increases of 3.6% and 2.6%, respectively.

Despite the gains realised throughout the majority of the market, it was again the miners and resource companies that weighed the market down this week. The pain for BHP Billiton (ASX: BHP) shareholders continued, recognising a loss of 3.3%, whilst Rio Tinto (ASX: RIO) dropped -0.5%.

Foolish takeaway

Although the market showed signs of recovering, the volatility is bound to continue well into the future. Whilst this may not seem so appealing to the value of your portfolio, it also presents as an excellent opportunity to pick up quality companies at heavily discounted rates.

The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” 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!

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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