If a lead set by Wall Street is anything to go by – and it normally is – we're in for another emotionally draining day on the ASX.
The Dow Jones staged a minor recovery in the late stages of last night's session but still closed 1.1% lower at 16,330 points – 11% below its all-time high. The tech-heavy NASDAQ ended even lower, down 1.5%, while the S&P 500 dropped 1.2%.
The losses have mostly been attributed to a drag in commodity prices as investors continue to worry about the health of the world's second largest economy, China. As highlighted by the Fairfax press, these concerns sent raw materials prices tumbling towards the lowest level in more than a decade.
Conditions weren't any better elsewhere in the world, either. London's FTSE 100 fell 2.8% while the DAX, Germany's stock index, plunged 3.8%. The latter was dragged down by a disastrous performance by Volkswagen in the wake of its emissions scandal which could lead to tougher regulations in the automotive industry.
The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) regained 0.7% during yesterday's session but it seems unlikely we'll end today in the black. Companies in the resources sector, including BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO), could also be hit hard, after their London-listed shares copped a beating overnight. BHP's shares dropped 5.1% while Rio Tinto's dropped 3.5%.
While a little volatility shouldn't be a concern for investors focused on the long-term, those investors do need to ensure they're prepared for the worst and that they're emotionally committed to remaining calm and composed so as to not sell into the panic.
