A bloodbath for the S&P/ASX 200: Here’s what you need to know

The Australian sharemarket is a sea of red today.

In what can only be described as a ‘bloodbath’, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has retreated a startling 1.9% which follows on from the pain felt overnight in equity markets around the world. In the UK, the FTSE 100 dropped 2% while over in the US, the Dow Jones and NASDAQ indices fell 1.9% and 1.6% respectively. The S&P 500 also lost 1.8%.

The heavy selling around the world has come as a result of the crumbling oil price and fears of what will happen should it fall any further. Brent oil, the global benchmark, fell by 4.9% to US$53.65 per barrel while US light crude oil fell below US$50 for the first time since early 2009. While that is good for consumers in the short-term, investors could be getting concerned that the falling prices more reflect a demand issue, signalling a slowing global economy.

While the energy sector has been hit the hardest, the pain has been widespread throughout the stock market. Of the oil producers, BHP Billiton Limited (ASX: BHP) and Woodside Petroleum Limited (ASX: WPL) have dropped 5 and 5.2% respectively while Santos Ltd (ASX: STO) has retreated 8%.

Australia and New Zealand Banking Group (ASX: ANZ) is leading the banks downwards with its 1.5% loss with each of its rivals also down more than 1%. Woolworths Limited (ASX: WOW), Telstra Corporation Ltd (ASX: TLS) and Rio Tinto Limited (ASX: RIO) are all sitting in the red too while Metcash Limited (ASX: MTS) has dropped 7.9%.

Time to panic?

It’s easy to become overwhelmed or even downright terrified on days like today. Watching your portfolio plunge in value is never enjoyable and many investors choose to sell to limit their losses.

The fact is, days like today can actually open up the perfect opportunity for long-term focused investors to buy stocks at bargain prices. While it may not be wise to venture into the energy or mining sectors just yet, there are plenty of other compelling stocks which could be great pickups today.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

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