One of the most dramatic single-stock moments I can recall on the ASX occurred yesterday. It revolved around ASX 200 blue chip share, healthcare stock, and hearing-loss pioneer Cochlear Ltd (ASX: COH). Cochlear stock is an ASX staple, having first listed on our stock exchange back in 1995.

Since then, it has carved out a reputation as being one of the ASX 200's most reliable blue chips, with a leading position in the global hearing loss industry. For years, investors were used to strong and steady returns from this company, resulting in it habitually trading at a lofty valuation. It was arguably the very definition of a sleep-well-at-night stock.

Well, anyone who currently owns this stock probably didn't sleep too well last night. Yesterday, we saw one of the most shocking trading updates in ASX history. Certainly in Cochlear's.

As we covered at the time, Cochlear told investors to expect the company to bring in between $290 million and $330 million in underlying net profit over the 2026 financial year. That's down from the previous guidance of $435 million to $460 million. Ouch.

This downgrade seems to be a consequence of a perfect storm of negativity for Cochlear. The company is being buffeted by supply chain challenges, in part due to the ongoing closure of the Strait of Hormuz. But the company is also dealing with hospital capacity constraints and falling referrals.

Cochlear stock crashes 40% lower: How much have investors lost?

Investors reacted with cold fury to this news yesterday. After closing at $167.94 a share on Tuesday evening, Cochlear tanked a brutal 40.71% in yesterday's trading alone to finish at just $99.58 a share.

Today, the selling has continued, with Cochlear stock down another 3.1% at the time of writing to $96.40 a share. At this pricing, the ASX 200 healthcare share has now lost 63% of its value in 2026 to date, and 63.7% over the past 12 months. Cochlear stock is also down more than 72% from the most recent record high of over $348 a share, seen back in July 2024.

To put this drop in some more context, the first time Cochlear hit $97 a share was way back in February of 2016. So, at least at this point in time, investors who bought Cochlear shares ten years ago have nothing to show for it except some dividend payments.

No doubt owners of Cochlear stock will be hoping that the company can stage a profitable comeback. But we shall have to wait and see what happens next.

At the current Cochlear stock price, this ASX 200 healthcare share has a market capitalisation of $6.41 billion, with a price-to-earnings (P/E) ratio of 18.6.

The post Cochlear stock down 40%: How much has this cost ASX investors? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Cochlear. The Motley Fool Australia has recommended Cochlear. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It was a rather horrid hump day for the S&P/ASX 200 Index (ASX: XJO) and many ASX shares today, as investor pessimism once again took over the markets.

After spending the entire session in red territory, the ASX 200 ended up closing down a nasty 1.18%. That leaves the index at 8,843.6 points at this mid-week point.

Today's unhappy performance from the Australian markets follows a similarly negative night up on Wall Street.

The Dow Jones Industrial Average Index (DJX: .DJI) closed down 0.59% after initially rising during morning trading.

In a rare coincidence, the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) also finished up with a 0.59% loss.

But let's return to the local markets now and dive a little deeper into how today's pessimism filtered down into the various ASX sectors.

Winners and losers

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Yesterday, we discussed the concept of 'stagflation', what it is, and why the global economy might be about to face its first significant bout of it since the 1970s. Today, we will expand on that by looking at its potential impacts on an ASX stock portfolio, and how investors can prepare for that risk.

It's well worth taking a moment, at least in my completely unbiased opinion, to dive into yesterday's piece. But if you want the 'tldr' version, stagflation refers to the phenomenon where an economy experiences persistently high inflation at the same time as it suffers from stagnant or falling economic growth and rising unemployment. Stagnant growth plus sticky inflation equals stagflation.

Historically, periods of stagflation have been rare occurrences across the advanced economies of the world. The last major stagflationary period occurred in the 1970s, and was sparked by a series of oil shocks. It doesn't take a lot of imagination to work out why investors are again worried about stagflation in 2026.

So if Australia and other major economies of the world do enter a period of stagflation, what does this mean for investors? That's what we'll be talking about today.

Rising prices, stagnant growth

Stagflation represents a double-whammy of risk to ASX stocks. Companies have to manage a low-growth economy that may see rising unemployment, potentially high interest rates, and depressed consumer confidence. At the same time, they must manage the impact of sticky inflation and perpetually rising costs. It's the exact opposite of what we could describe as ideal business conditions.

Under a stagnation-riven economy, most businesses will suffer, and only the companies of the highest calibre will manage to consistently compound their revenues and profits. It's these businesses that ASX investors should focus on identifying and investing in.

Fortunately, we already know the playbook that is best employed here. It comes from none other than legendary investor Warren Buffett. Buffett has long touted the benefits of investing in companies that possess a wide economic moat. This term, which Buffett himself coined, refers to an intrinsic competitive advantage that a company can possess, which helps it ward off both competition and destructive economic forces.

This could come in the form of a strong, loyalty-commanding brand, a low-cost advantage of production, or making a good or service that customers find difficult to avoid buying. Most of the companies that Buffett invested in at Berkshire Hathaway, including Coca-Cola, Apple and American Express, possessed at least one of these characteristics.

Its these companies that, at leas tin my view, are best positioned to survive, and even thrive, in a stagflationary economy.

Stagflation stock picks?

ASX investors might wish to take a look at the holdings of the VanEck Morningstar Wide Moat ETF (ASX: MOAT), or the ETF itself, for some ideas in this vein. I would also argue that many of the ASX's top blue chips how clear signs of possessing at least one wide economic moat. These could include Telstra Group Ltd (ASX: TLS), Commonwealth Bank of Australia (ASX: CBA), Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL), Transurban Group (ASX: TCL), and Wesfarmers Ltd (ASX: WES).

Saying that, finding a wide-moat ASX stock is not the end-game. Investors also need to buy shares of these stocks at prices that make sense. And that is certainly easier said than done.

The post Stagflation: How to position an ASX stock portfolio appeared first on The Motley Fool Australia.

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American Express is an advertising partner of Motley Fool Money. Motley Fool contributor Sebastian Bowen has positions in American Express, Apple, Berkshire Hathaway, Coca-Cola, VanEck Morningstar Wide Moat ETF, and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Berkshire Hathaway, Transurban Group, and Wesfarmers and is short shares of Apple. The Motley Fool Australia has positions in and has recommended Telstra Group, Transurban Group, and Woolworths Group. The Motley Fool Australia has recommended Apple, Berkshire Hathaway, VanEck Morningstar Wide Moat ETF, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Block and DroneShield and is short shares of DroneShield. The Motley Fool Australia has recommended Eagers Automotive Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The ASX is no stranger to new exchange-traded funds (ETFs). In fact, our share market regularly welcomes new ASX ETFs seemingly every other month.

These new ETFs range from index funds to thematic ETFs that aim to capitalise on the latest hot trend of the markets.

The new offering from ETF provider BetaShares arguably falls into the latter camp.

Betashares has recently announced that ASX investors should expect a new fund to debut on the ASX in the near future. This fund will be known as the Betashares Space Industry ETF and will trade under the ticker code 'RCKT'. No prizes for guessing what this fund might allow ASX investors to put their money into.

Getting ahead of a SpaceX IPO?

There are also no prizes for guessing what may have prompted BetaShares, a company that offers thematic ETFs ranging from cybersecurity and cryptocurrency to uranium and esports, to till this ground.

The investing world has been gripped this year by substantiated rumours that Elon Musk is finally about to float his monstrous space exploration and utilisation company, SpaceX, on the public markets. Musk has previously been famous for his stewardship of electric battery and vehicle manufacturer Tesla Inc (NASDAQ: TSLA), which has been listed on the American stock markets for more than a decade.

But in addition to Tesla (and a few other companies for good measure), Musk also heads up SpaceX, also known as Space Exploration Technologies Corporation. This company was previously well-known for its dramatic and cutting-edge rocket apparatus. Not to mention its Starlink satellite internet service. But in recent years, Musk has integrated it into his other business ventures. Earlier this year, he finalised a merger of SpaceX with xAI, the company that now owns X (formerly Twitter).

If, or maybe when, SpaceX IPOs, some investors are anticipating that it could have a valuation north of US$1 trillion, perhaps even US$2 trillion. That would make this company the biggest IPO in history. It's probably fair to say that Betashares was anticipating this event when it pressed the launch button on RCKT.

What will this new ASX space ETF look like?

We don't yet know what kind of holdings this new ASX ETF from BetaShares may hold, aside from a potential stake in SpaceX upon its debut. However, we can look at some other ETFs for guidance here.

Over in the US, the ARK Space & Defense Innovation ETF (NYSE: ARKK) has been around since 2021. It currently holds names like RocketLab and Teradyne. VanEck also offers the VanEck Space Innovators ETF (SWX: JEDI) on European markets. This aptly-named fund holds Planet Labs and Firefly Aerospace amongst its top holdings. RCKT may hold some of these names when it eventually launches.

Space can be a tricky terrain to navigate for investors, though. Long-time readers might remember the explosive growth of Virgin Galactic Holdings Inc (NYSE: SPCE) back in 2021. Perhaps fuelled by COVID dollars, this space stock rocketed almost 300% in a month back in mid 2021. Today, though, at US$2.92 a share, it is down 99.7% from its 2021 peak of over US$1,100. SpaceX hopefuls will no doubt be hoping for a better experience than that. After all, in space, no one can hear you scream, even if you're a shareholder.

Let's see how the Betashares Space Industry ETF fares when it eventually launches on the ASX.

The post BetaShares is about to launch a new ASX space ETF. Here's what we know appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Planet Labs PBC, Rocket Lab, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Teradyne. The Motley Fool Australia has recommended Rocket Lab. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Regardless of one's feelings towards the current occupant of the White House, it's fair to say that the United States' historic role as the leader of the free world is at its lowest ebb since at least the end of the Second World War. With faith in the United States as a global leader waning, could investing in Chinese shares be a prudent move for ASX investors? If so, the iShares China Large- Cap ETF (ASX: IZZ) might be an easy way to do it.

For more than 70 years, the US has been at the centre of the global financial system. Even after the US-dictated 'Bretton-Woods' gold standard collapsed in the 1970s, the vast majority of world trade has, and continues to occur, in US dollars.

However, many investors are asking how long American dominance of the financial system will continue. US President Donald Trump has made no secret of his disdain for multilateral forums like NATO, the United Nations (UN), and the International Monetary Fund (IMF), viewing them through his 'America First' ideology as unnecessary drains on American resources.

If American power and influence on the international stage does decline, the logical heir, at least in many minds, is China.

China is the world's second-largest economy and has made no effort to hide its own superpower ambitions. China already dominates several future-facing industries, including electric vehicles, rare earths processing, and renewable energy.

So, is now the time to invest in China?

One of the easiest ways to do so from the ASX is through the iShares China Large-Cap ETF. This exchange-traded fund (ETF) holds a basket of 50 of the largest Chinese stocks. These stocks are dominated by China's largest tech titans, including Alibaba, Tencent, and Xiaomi. These companies currently make up 9.01%, 8.16%, and 7.97% of IZZ's portfolio, respectively. Other names that might be familiar to readers include carmaker BYD and food delivery giant Meituan.

If an ASX investor wishes to invest in China, this ETF provides one of the simplest paths.

Is IZZ a buy today?

This ASX ETF might prove to be a long-term winner for ASX investors, particularly if the US does continue to bleed power and influence to China.

However, I won't be buying it.

I happen to take Warren Buffett at his word when he tells us to 'never bet against America'. Sure, the America of 2026 is not the same America that most of us grew up with. However, I think this country's long history of innovation and open markets will continue to enable it to produce the best companies in the world. Plus, for all we know, the US could elect a very different President in 2028.

Right now, that is certainly the case. China may have some impressive companies. But none, at least in my view, can rival Apple, Microsoft, Nvidia, Amazon, Alphabet, Coca-Cola, Tesla, Netflix, and many, many others in terms of global reach and dominance.

China does not have the political polarisation of America. But it is also a country that coerces its companies to place loyalty to the Chinese state above its shareholders' interests, and to obey the central government's every whim. That's not something that many investors in Australia would welcome, I'd wager. It does not technically even allow non-citizens to directly own shares of Chinese companies (look it up).

As such, I would rather put my money in a country that values financial transparency and has always been the home of the world's best businesses. Its politics might be volatile. But the American financial system remains the central pillar of the global economy. As such, I'm listening to Uncle Warren on this one.

The iShares China Large- Cap ETF charges a management fee of 0.6% per annum. As of 31 March, it has returned an average of 5.63% per annum since its 2004 inception.

The post With the US flailing, is it time to buy the iShares China Large-Cap ETF (IZZ)? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon, Apple, Berkshire Hathaway, Coca-Cola, Microsoft, and Netflix. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, Microsoft, Netflix, Nvidia, Tencent, and Tesla and is short shares of Apple. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alibaba Group and BYD Company. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Berkshire Hathaway, Microsoft, Netflix, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

I'd wager that if you have come across the term 'stagflation', it was sometime in the past seven weeks or so. Before the onset of the Iran war, stagflation was a term that was last bandied about in mainstream economic reporting back in the 1970s. As such, if one isn't a student of history, or studied economics at high school or university, the term might be completely unfamiliar.

Yet since the beginning of March, you can't open the business section of a news article without coming across a mention of stagflation.

So today, let's go over what this rather strange term means.

What is stagflation?

To understand the concept of stagflation we first need to recognise that this term is actually a portmanteau. Put simply, it is a word that has been created by merging two other words. Those two other words are 'stagnation' and 'inflation'.

When an economy experiences stagflation, it is suffering from high inflation and low, or stagnant, growth, at the same time.

This is actually a rather uncommon economic phenomenon. Under conventional economics, inflation occurs when the economy is running too hot for its own good. There is more money sloshing around than the economy can handle. As such, in lieu of increasing output beyond capability, an economy's producers begin increasing prices. This cascades through the economy until prices are rising at a dangerous rate.

This inflation is known as 'demand driven'. It is easily countered, according to traditional economics anyway, by governments pumping the breaks. This can come in the form of higher taxes, or more commonly higher interest rates from central banks like the Reserve Bank of Australia (RBA).

These higher rates (or taxes) pull money out of the economy and break the cycle of rising prices. The trade-off is cooler economic growth, of course. Under traditional economic models, the trade-off between interest rates and inflation is akin to a see-saw. If one gets to high, all a central bank needs to do is jump on the other side. Balancing this see-saw is what most central banks, including the RBA, have spent the past 50 years doing.

What causes stagflation?

However, this model only works to manage demand-driven inflation. When it comes to supply-side inflation, the rulebook slides into impotence.

The last time the world saw a bout of stagflation was back in the 1970s. It was sparked by, you guessed it, an oil shock.

Back in the '70s, the OPEC cartel decided to punish the United States and its allies for supporting Israel in the 1973 Yom Kippur War by restricting oil supplies. Oil skyrocketed, sparking rampant inflation throughout much of the world. This inflation was driven by a supply limit of oil, one of the fundamental inputs into most forms of economic activity.

Unlike the inflation we've become used to, it was not caused by excessive demand int eh economy. As such, central banks couldn't just pull the interest rate lever and hike inflation away. Instead, they had to try and manage inflation as best they could, at the real cost of ongoing economic growth. As such, high inflation, held up by increased oil prices, persisted, while economic growth languished. Stagflation, in other words.

Stagflation is often cited as a central bank's 'worst nightmare', because of the lack of easy solutions. Reducing rates will only stoke inflation, while increasing rates will prolong the downturn and increase unemployment.

This problem bedevilled the major economies of the world for years. It was only when OPEC split due to geopolitical tensions and the global oil price came back down in the early 1980s that this supply shock faded. By then, the world had responded to higher oil prices by, for example, diversifying their sources of oil, building more efficient cars and expanding the use of gas and nuclear power. Sure, inflation remained high over that decade. But growth picked up to match it.

Foolish takeaway

Stagflation is an unusual economic phenomenon only experienced a few times in recorded economic history. However, with inflation already uncomfortably in Australia before the Iran war, and a 21st century oil shock a distinct possibility (if it's not already occurring), it may be a malady that we will once again have to navigate.

Tomorrow, we'll look at how to position an investing portfolio to account for the possibility of stagflation, so stay tuned for that.

The post RBA's 'worst nightmare': What exactly is stagflation? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Over the past six or seven weeks, I have begun to reassess my ASX share portfolio and stress-test it for the worst possible scenario when it comes to the ongoing conflict between Israel, the United States, and Iran. After all, I'm a 'hope for the best, prepare for the worst' kind of guy when it comes to these situations. And this latest Middle East conflict is throwing up some pretty nasty potential consequences.

After a comprehensive reevaluation of my portfolio, I have realised that a mistake I made years ago when building it is still haunting it. This mistake is one that I have decided to dedicate 2026 to correcting.

A personal note here, one of my weaknesses is a love of a good collection. I am a collector at heart, and have been my entire life. There are few things I can resist less than a full collection, whether it be a book series or a set of trading cards. Or stocks.

When I first began building my stock portfolio, I couldn't help but try to own shares of every high-quality company I could find. If an item was in the supermarket, or contributed even a few stitches to the fabric of popular culture, I had to own shares of the company that made it.

A few years ago, I realised that this strategy perhaps wasn't the most prudent one. That revelation came when auditing my portfolio revealed that I owned more than a hundred different positions, all rather small. That is a ludicrous amount that prohibited the kind of dedication that is necessary for stock market success.

My 2026 ASX share portfolio goal

Over subsequent years, I sold down many of those positions that, while I thought were decent companies, I lacked a deep knowledge of. These ranged from Nike, PepsiCo, and Unilever, to Kraft Heinz, Adobe, and Hasbro.

Most of these names are high-quality companies whose products can be found all over the world. But I simply had too many of them to keep track of. My love of collecting had become a burden on my finances.

Today, my portfolio is simpler, more nimble and easier to keep an eye on. However, even though I have sold off many holdings over the past few years, it is still too large. Here at the Fool, we usually tell investors that they should aim for somewhere between 15 and 25 companies in a typical individual stock portfolio. Unfortunately, I still don't have my money where our mouths are, and I currently own a lot more than 25 positions. But it is far less than the triple-digit figure I had a few years ago, so progress is being made.

One of my goals over the rest of 2026 is to reduce this portfolio further. Boiling it down, as it were. One of the things I have learned over my years in the market is that the best way to harness the power of compounding is to find the rare companies that can consistently compound their own revenues and earnings over time and buy as many shares as one can. There are only a handful of companies in my portfolio that I have faith in this endeavour. I'll be spending this year adding to them, and perhaps selling down the rest. In investing, as with many things, often less is more.

The post My ASX share portfolio: Overcoming a common investing mistake appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Kraft Heinz, PepsiCo, and Unilever. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe and Nike. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Hasbro, Kraft Heinz, and Unilever and has recommended the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool Australia has recommended Adobe and Nike. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Over the past few years, or even perhaps decades, passive investing has become one of the most widely-implemented strategies when it comes to building wealth on the stock market. ASX investors simply love index funds, with the ease of access, cheap management fees, and hands-off approach resonating with many Australians.

In years gone by, there were only a handful of index funds available to Australian investors, making the choice, if one had decided to go down the index fund road, easy. However, that is not really the case today. If you are searching for index funds on the ASX, there are now an overwhelming number of options one could go for. This situation, whilst good for the discerning investor, can make life tricky for those just wanting a set-and-forget strategy.

With that in mind, today, let's go through three ASX index funds that I think amount to the best choices our market has to offer a passive investor in 2026.

Three top ASX index funds for passive investing in 2026 and beyond

First up, we have the BetaShares Australia 300 ETF (ASX: A300). This ASX index fund tracks the largest 300 stocks listed on the Australian share market. That includes everything from Commonwealth Bank of Australia (ASX: CBA) and Telstra Group Ltd (ASX: TLS) to Coles Group Ltd (ASX: COL) and Ampol Ltd (ASX: ALD).

Like most index funds (and the other two we'll discuss in a moment), this fund is weighted by market capitalisation. That means the larger the company, the larger its slice of the index fund pie.

Full disclosure, I own an S&P/ASX 300 Index (ASX: XKO) fund, but it's not A300. This fund only launched in August of last year, and I have held the Vanguard Australian Shares Index ETF (ASX: VAS) for many years. But A300 would be my choice for new investors, simply because it charges a lower management fee of 0.04% per annum.

Our next fund worth considering is the iShares S&P 500 ETF (ASX: IVV). This fund is similar in nature to A300. However, instead of holding the ASX's 300 largest stocks, it holds the 500 largest companies in the American markets. That includes big tech titans like Nvidia, Tesla, Amazon, and Microsoft, as well as other American companies such as ExxonMobil, Coca-Cola, Walmart, and General Motors.

I think most ASX investors will benefit from expanding their portfolios beyond Australia's borders, and IVV holds many of the world's best companies. It also charges a management fee of 0.04% per annum.

Last but not least

Finally, investors may wish to consider the Vanguard MSCI Index International Shares ETF (ASX: VGS). As its name implies, this ASX index fund represents access to a number of international stock markets. That includes the US, but also Britain, Canada, Japan, Spain, Israel, Singapore, and many others. In addition to IVV's top holdings (which VGS largely shares), this fund's portfolio includes stocks such as Nestle, Toyota, AstraZeneca, and Shell.

If you wanted a US-centric index fund that also grants exposure to a diversified supplementation of advanced economies' markets, VGS is a fabulous option to consider. This ETF charges a management fee of 0.18% per annum.

The post What are the ASX's top 3 index funds for passive investing? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Amazon, Coca-Cola, Microsoft, and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, AstraZeneca Plc, Microsoft, Nvidia, Tesla, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended General Motors and Nestlé. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Amazon, Microsoft, Nvidia, Vanguard Msci Index International Shares ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It was a rather disappointing end to the short trading week for the S&P/ASX 200 Index (ASX: XJO) this Thursday. After initially starting strong this morning, investors took a major step back when US President Donald Trump addressed the nation at midday (our time).

Trump's declaration that the war with Iran would go on for another "two to three weeks" was enough to start the selling. By the time the markets closed up for the Easter break, the ASX 200 had slumped by a nasty 1.06%. That fall leaves the index at 8,579.5 points as we head into the long weekend.

This volatile session for Australian investors follows a far more optimistic morning up on the American markets (let's see what happens tomorrow over there).

The Dow Jones Industrial Average Index (DJX: .DJI) had a comfortable time of it, rising by 0.48%.

Meanwhile, the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) was even more enthusiastic, gaining 1.16%.

But let's return to the local markets now and check out how the various ASX sectors dealt with today's whipsawing trading conditions.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

More reading

• 5 ASX 200 shares with renewed buy ratings this week
• Regis Resources posts solid March quarter with strong cash flow and dividend
• Emerald Resources delivers record cash flow and project progress in March 2026 quarter
• 5 ASX dividend shares I'd buy for a second income
• Mirvac provides Q3 FY26 operational update; reaffirms upbeat guidance

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group and Woolworths Group. The Motley Fool Australia has recommended HomeCo Daily Needs REIT. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Looking at the WAM Capital Ltd (ASX: WAM) share price today, it's likely that one particular metric might jump out at you. That would be this listed investment company (LIC)'s dividend yield. At the time of writing, WAM Capital shares are going for $1.69 each. At this pricing, WAM Capital is trading with a trailing dividend yield of 9.17%.

Let that sink in for a moment. We have a stock that is ostensibly offering to return $9 a year in cash flow for every $100 invested. That's almost twice what you could expect from a savings account or term deposit right now. And more than twice what other popular dividend stocks, ranging from Coles Group Ltd (ASX: COL) to Commonwealth Bank of Australia (ASX: CBA) and Telstra Group Ltd (ASX: TLS), currently have on the table.

So, does that 9% yield make WAM Capital shares a screaming buy for income-hungry investors, or investors more generally?

Well, as you might suspect, the answer is definitely not an unambiguous 'yes'. Whenever the market is offering a stock with a 9% yield, one should always exercise a high degree of caution. After all, if that kind of yield was a sure thing, investors would flock to its shares, pushing up the price and lowering the running yield.

That is clearly not happening with WAM Capital, so we must ask ourselves why.

Does a 9% yield make WAM Capital shares a screaming buy?

Well, our first red flag is the WAM Capital share price itself. This is not what one might call a high flyer. At the current share price, this LIC has lost more than 24% of its value over the past five years. In fact, investors who bought WAM Capital shares ten years ago would also be down by about 25% from their initial investment.

This indicates to us that WAM Capital pays out all of its profits, and then some, as dividends.

WAM Capital's dividends also look to be on shaky ground. Over 2025, this company paid an annual dividend of 15.5 cents per share. As of the company's most recent update, it appears that WAM Capital has only 21.1 cents per share in its 'profit reserve', which it uses to fund its dividends. That means WAM Capital can only afford another 12-18 months of payouts if this reserve isn't topped up.

So, it seems the market has weighed up all this and decided there is a high risk of lower dividends from WAM Capital going forward. This company could well be a reliable source of dividend income for investors who buy today. But given the company's poor share price performance over many years and its near-empty profit reserves, investors should at least consider the not-insignificant risks of this stock.

The post Thinking of buying WAM Capital shares for the 9% dividend yield? Read this first appeared first on The Motley Fool Australia.

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• Up more than 300% over a year, this ASX energy share is hitting new highs
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• Why Deep Yellow, Develop Global, Resolute Mining, and Santos shares are pushing higher today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX stocks that offer investors the prospect of both growth and income are a rare breed on the ASX. I think MFF Capital Investments Ltd (ASX: MFF) is one such share though.

MFF Capital is a listed investment company (LIC) that has been on the ASX for almost two decades. Despite a lack of publicity and fanfare, it has produced some exciting returns for investors ever since its listing.

Today, its sharers are looking compelling. MFF currently sports a trailing dividend yield of 4.09% (as of yesterday's closing price). So let's discuss whether this ASX stock is the best growth and income play on the ASX.

Like most LICs, MFF owns and manages an underlying portfolio of investments. In this case, that underlying portfolio consists mostly of US stocks, with some other international companies thrown in. MFF has always followed a Warren Buffett-insprired approach to investing. Its holdings tend to be mature, dominant companies that display signs of possessing a moat, or intrinsic competitive advantage that helps it stay ahead of competition. These companies are purchased at compelling prices, and held indefinitely for the benefit of MFF shareholders.

Some of MFF's largest positions have been in its portfolio for many years. They include the likes of Amazon, Mastercard, Alphabet, Visa, American Express, and Microsoft.

This strategy has paid off for MFF's long-term investors. By my calculations, investors have enjoyed an average total return (share price growth plus dividends) of about 12.1% per annum over the past ten years, and 15.05% per annum over the past five. On the latter metric, investors have received an average share price growth rate of 11.7% per annum.

Growth and income from this top ASX stock?

So we know MFF offers plenty of growth potential. But what about income?

Well, MFF has that in spades too, and is more potent that even its starting 4%-plus yield would indicate. As I've discussed before, MFF is one of the ASX's best dividend growth stocks. To prove it, let's go back through this ASX stock's recent dividend history. Back in 2017, MFF paid out 2 cents per share in fully-franked dividends to its shareholders. By 2021, the company was up to forking out 7.5 cents per share. Last year, it had hit 17 cents per share.

In 2026, the company has told investors to expect a total of 21 cents per share, up 23.5% from just 2025 levels if so. The trajectory of 2 cents per share to 21 cents per share in 2026 would come to an compounded annual growth rate of 26.4% per annum.

If this blistering dividend growth rate continues, it will be exceptionally lucrative for long-term investors.

All in all, I regard MFF Capital as one of the ASX's best performers in recent years, and a stellar investment, period. I am happy to hold it in my own portfolio, and equally happy to recommend it to any investor who is searching for growth and income today.

The post This 4% ASX stock is my top pick for growth and income in 2026 appeared first on The Motley Fool Australia.

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American Express is an advertising partner of Motley Fool Money. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon, American Express, Mastercard, Mff Capital Investments, Microsoft, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Mastercard, Microsoft, and Visa. The Motley Fool Australia has recommended Alphabet, Amazon, Mastercard, Mff Capital Investments, Microsoft, and Visa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) enjoyed a spectacular rebound this Wednesday, surging back to life after what had been a lacklustre and indecisive few trading days. The ASX 200 spent all day firmly ahead of where it closed yesterday and ended up closing with a sizeable 2.24% gain. That leaves the index at 8,671.8 points.

This jubilant hump day session for ASX shares comes after an even more euphoric morning on the American markets.

The Dow Jones Industrial Average Index (DJX: .DJI) was off to the races, gaining 2.49%.

The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) put the turbocharger on though, exploding 3.83% higher.

Let's get back to the local markets now and see how today's gains filtered down into the different ASX sectors.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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• 5 ASX 200 shares with renewed buy ratings this week
• Why Deep Yellow, Develop Global, Resolute Mining, and Santos shares are pushing higher today
• Regis Resources posts solid March quarter with strong cash flow and dividend
• Emerald Resources delivers record cash flow and project progress in March 2026 quarter

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Eagers Automotive Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Late last month, amid all of the chaos of the Iran war, something extraordinary happened on the ASX. More specifically, with Telstra Group Ltd (ASX: TLS) stock.

On 24 March, shares of this ASX 200 telco hit a new 52-week high. Not only was it a new 52-week high, but the highest Telstra stock has traded at in many years. Yep, last Tuesday saw Telstra shares top $5.37 each. We haven't seen that kind of pricing on this telco since at least early 2017. That means Telstra was at a nine-year high a week ago.

Today, Telstra stock has cooled off a little, but is still at $5.32 at the time of writing. That puts the company at an impressive year-to-date gain of 9.45% for 2026, and up 24.8% over the past 12 months.

Telstra is a strong and mature ASX 200 blue-chip stock. But gains of this magnitude prompt us to wonder whether the telco is still a good deal at $5.37 a share. Or indeed, at today's $5.32.

So let's talk about that.

Is Telstra stock a buy at $5.37?

That's a tough question for investors to consider. Telstra, as we've already established, is a high-quality company that dominates its sector and shows characteristics of possessing a wide economic moat.

It is also growing at a slow-but-steady pace. The company's most recent earnings, released in February, showed Telstra growing its reported earnings per share (EPS) by 11% to 9.9 cents, as well as its underlying net profits after tax by 10% to $1.2 billion.

Investors have to consider whether Telstra's future growth trajectory is enough to justify its current share price, though. At today's price, Telstra stock trades at a price-to-earnings (P/E) ratio of 26.6.

That's not ridiculous, but it's arguably not cheap either. For comparison, that's about the same earnings multiple that Google-owner Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) is currently at.

But what about Telstra stock's dividends? After all, many investors just buy this telco for its famously large and dependable income cheques.

Well, Telstra's galloping share price over recent months has indeed come with the unfortunate consequence of reducing Telstra's dividend yield. Investors were perhaps used to a yield well over 4% until Telstra went on this stock price surge. Today, the company is trading with a yield of about 3.8%.

That's certainly not as attractive as it once was. Particularly so if we consider that one can obtain a safer 5% yield with a cash investment like a term deposit these days.

Brokers still call buy

Saying that, some ASX brokers still think Telstra is a buy today. Last week, my Fool colleague covered the outperform rating that Macquarie's brokers gave Telstra shares. Macquarie thinks the recently announced price increases on Telstra's mobile offerings bode well for the company's future and dividends. The broker has set a 12-month stock price target of $5.64 per share for Telstra.

Let's see if Macquarie is on the money there.

The post Is Telstra stock a buy at $5.37 a share? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Alphabet. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group and Telstra Group. The Motley Fool Australia has recommended Alphabet. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The war that the United States of America and Israel launched against Iran at the start of this month has comprehensively changed the investing landscape. Many ASX shares that were previously expecting to have a relatively smooth 2026 are now wargaming the supply of their most basic inputs – energy. Investors with ASX share portfolios would be forgiven for wondering how to chart a course forward. 

Of course, the energy shock that has resulted from this war is still reverberating through the global economy. We don't yet know whether the Strait of Hormuz will be closed for another day or another year. 

What we do know is that things will be different, in both the Australian and global economies, for a while.

So how do we account for these differences in our own ASX share portfolios?

Well, I think there are three things investors can do.

Three ways to position an ASX share portfolio for 2026

Firstly, ASX investors can focus on finding and owning shares of companies that possess a moat, or an intrinsic competitive advantage that can protect them from inflation, recessions, and other potential economic maladies in 2026. 'Moats' are a concept initially coined by legendary investor Warren Buffett, who only tends to buy companies that he thinks possess at least one wide moat. This could be a cost advantage, a powerful brand that inspires loyalty, or else making a good or service that investors find difficult to avoid buying.   

Companies that possess these moats are usually the most resilient in the markets. They tend to survive the bad times and thrive when the global economy is booming.

Secondly, investors can take advantage of higher interest rates. Few Australians get excited when the Reserve Bank of Australia (RBA) lifts rates, as it did at the start of this month. But while higher rates make loans and mortgages more expensive to service, they also increase the returns of cash and fixed-interest investments. With term deposit rates now above 5%, there's nothing wrong, at least in my view, with parking your surplus cash in the bank rather than the share market if you are worried about where things might go next. After all, the interest rate on a term deposit is completely safe, unlike an investment in any ASX share.

This time it's different?

Finally, and this might be tough to hear, investors might want to prepare for a rough 2026 by lowering their expectations. The past few years have been exceptionally lucrative for stock market investors. To illustrate, as of 28 February, the iShares Core S&P/ASX 200 ETF (ASX: IOZ) has averaged 12.15% per annum over the past three years, and hit 16.2% for the preceding 12 months. Those are uncommonly high returns for a simple ASX index fund. The longer-term average sits closer to 8% per annum.

I'm a firm believer in the enduring tendency for investing metrics to regress to their mean. As such, I wouldn't be surprised to see a return of well below 12% for the ASX 200 in 2026, and possibly in 2027 and beyond as well.

The post The Iran war has changed investing. Here are 3 ways to position an ASX share portfolio appeared first on The Motley Fool Australia.

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• Up more than 300% over a year, this ASX energy share is hitting new highs
• This ASX gold stock just made a key move. Here's why investors are watching closely
• 5 ASX 200 shares with renewed buy ratings this week
• Will global defence ASX ETFs keep climbing? Expert
• Why Deep Yellow, Develop Global, Resolute Mining, and Santos shares are pushing higher today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It was a wild, but ultimately positive Tuesday for the S&P/ASX 200 Index (ASX: XJO) today. Initially, investors were not in a good mood this morning. But that sentiment changed just before lunchtime and held for the rest of the afternoon as investors pushed the market higher. By the time the closing bell rang, the ASX 200 had recorded a 0.25% rise. That leaves the index at 8,481.8 points.

This optimistic session for the local markets followed a mixed start to the American trading week over on Wall Street in the early hours of this morning.

The Dow Jones Industrial Average Index (DJX: .DJI) managed to snatch a win from the jaws of defeat, rising by 0.11%.

The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) wasn't so lucky, though, falling 0.73%.

But let's return to Australian shares now and take stock of how today's indecisiveness affected the various ASX sectors this session.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 SiteMinder, Temple & Webster Group, and Xero. The Motley Fool Australia has positions in and has recommended SiteMinder and Xero. The Motley Fool Australia has recommended Generation Development Group and Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It's always exciting when a big-name company conducts an initial public offering (IPO) on the ASX. This week, the latest company set to go through an IPO is furniture company, and now stock, The Koala Company Ltd (ASX: KOA).

IPOs are blockbuster events, as they mark the transition, listing, and debut of what is usually a private company into the public markets. An IPO is the first chance most ordinary retail investors have to buy shares in a company they might already know and love. As such, they can provoke intense speculation and excitement in the markets. We saw this in action back in mid-2024 with the IPO of Guzman y Gomez Ltd (ASX: GYG), whose shares ended up soaring when they began trading on the ASX.

Today, Koala stock has followed GYG to list on our stock market. This company will already be familiar to many Australians, thanks to the popularity of its online-based mattress, sofa, and furniture store.

By all accounts, Koala is a very successful business. In a pre-IPO ASX release, the company told investors that its revenues were up 24% over the first half of FY2026 to $165.1 million. That helped Koala book an operating profit of $10.7 million from the period, up from $3.64 million over the same period in 2025.

Koala stock IPOs on the ASX

After a prospectus launch, stock offering, and settlement that all occurred earlier this month, The Koala Company's stock has debuted on the ASX today under the ticker code 'KOA'. The shares are floating after being offered at $3.40 each, giving Koala a nominal market capitalisation of $305.3 million and an enterprise value of $259.9 million. The new shares that will be issued under this IPO are forecast to raise $20 million for Koala.

At the time of writing, the IPO has gone well, with Koala stock currently up 2.65% at $3.49 a share.

Koala looks like a potentially exciting investment and is a home-grown success story. However, I will not be buying Koala stock during this IPO. I won't be buying them today, this week, or probably anytime soon.

Why? I have nothing against Koala itself. But I do not participate in IPOs as a rule.

The problem with IPOs

There are a few reasons why. Firstly, IPOs tend to generate huge hype and buzz, things that tend to push shares up higher than they should go. After a few days or weeks, that buzz fades as the new company begins to blend into the broader market. Investors, of course, are left holding the bag.

We saw this happen with Guzman y Gomez in 2024. GYG shares had a phenomenal IPO, gaining almost 50% in the first few months of trading on the ASX. But, as of today, GYG is down by more than 46% from where it began its ASX life.

That brings us to the second reason. IPOs are designed, front to back, to maximise the value for the sellers of shares into an IPO. Not for the buyers they are selling to. There are many ways the orchestrators of the IPO can do this, by deciding how many shares will float at the IPO to when insiders can sell their shares and what price the shares debut at.

It's for this reason that I think most buyers will be better off to wait.

I invested in an IPO once and lost a lot of money as a result. So perhaps I am biased here. But no matter how exciting a company is, I will always wait for the dust to settle from an IPO before I buy shares. That includes Koala stock.

The post I won't be buying the Koala stock IPO. Here's why appeared first on The Motley Fool Australia.

More reading

• Up more than 300% over a year, this ASX energy share is hitting new highs
• This ASX gold stock just made a key move. Here's why investors are watching closely
• 5 ASX 200 shares with renewed buy ratings this week
• Will global defence ASX ETFs keep climbing? Expert
• Why Deep Yellow, Develop Global, Resolute Mining, and Santos shares are pushing higher today

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

We've always lived in an uncertain world. However, I think it's fair to say that 2026 is shaping up to be a lot more uncertain than 2025. If the energy shocks that have gripped the globe since the start of March continue, we might be looking at the most uncertain year since 2020. Investing through such uncertainty can be intimidating. That's why I think one ASX exchange-traded fund (ETF) is worth a look right now.

It's my view that ASX investors who are looking to brace their portfolios against further geopolitical or economic shocks should resist the siren's song of buying energy shares, oil ETFs or other short-term bets.

Instead, those investors should consider which companies are best placed to protect their earnings bases amid the significant challenges that the world is currently throwing their way.

It's my view that consumer staples stocks are a sector that is best positioned to protect investor capital amid high levels of uncertainty. Consumer staples stocks are companies that produce or sell goods that we tend to need to buy regularly. That includes food, drinks and household essentials, as well as alcohol and tobacco. Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Endeavour Group Ltd (ASX: EDV) are all prominent examples on the ASX.

However, I think an ASX ETF is a better option than a single ASX stock in terms of protecting a portfolio against uncertainty. That's why I think the iShares Global Consumer Staples ETF (ASX: IXI) is a perfect fund for an uncertain 2026.

Why this ASX ETF is an antidote for uncertainty

As the name implies, this ASX ETF holds a basket of global consumer staples stocks. These range from food and drink producers like Coca-Cola Co, Nestle and Cadbury-owner Mondelez International and makers of household essentials like Colgate-Palmolive and Procter & Gamble to staples retailers and grocers like Walmart, Costco Wholesale and Kroger. Even our own Woolworths and Coles feature as holdings.

It's my view that these sorts of companies can ride out economic shocks and inflation better than any other sector. We all need to buy food and household essentials on a regular basis. That means that, although painful to consumers, these companies can effectively pass on higher costs without the threat of significant sales losses.

Even if consumers switch en masse from expensive branded products to cheaper home-brand options, this ASX ETF holds a mix of companies with strong brands (Procter & Gamble, Coca-Cola) and supermarket stores, mitigating this potential trend.

IXI's holdings are also spread across many different markets, also lowering geographic and currency risk to the ASX investor.

Pulling all of these factors together, and I think we have an ASX ETF that is a perfect investment for the uncertain world we find ourselves in in 2026.

The post This ASX ETF is perfect for an uncertain world appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Coca-Cola, Costco Wholesale, Mondelez International, and Procter & Gamble. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Colgate-Palmolive and Costco Wholesale. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Kroger and Nestlé. The Motley Fool Australia has positions in and has recommended Woolworths Group and iShares International Equity ETFs – iShares Global Consumer Staples ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) had a rough start to the trading week this Monday, although the markets recovered a little from a brutal mid-morning plunge by the time trading wrapped up today.

After starting deep in red territory this morning, the ASX 200 dropped as low as 8,379 points during intra-day trading before wrapping up at a flat 8,461 points. That puts the index down 0.65% for the session today.

This rather bleak Monday for ASX investors came after an even more turbulent end to the American trading week on Saturday morning (our time).

The Dow Jones Industrial Average Index (DJX: .DJI) was hit hard, dropping by a nasty 1.73%.

The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) fared even worse, falling by a horrid 2.15%.

But let's get back to this week and our local markets, and check out the damage to the different ASX sectors inflicted by today's market drop.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Well, the hopes of investors for a smooth and prosperous 2026 that many harboured at the start of this year are looking increasingly precarious as we approach April. With the ongoing and perhaps escalating war in the Middle East, investors are bracing for ongoing fallout in their ASX share portfolios.

This war has already delivered a severe and perhaps unprecedented energy shock, which is what happens when 20% of the global oil supply is effectively shuttered overnight. By many accounts, even if the war ends tomorrow, the energy shock will persist for some time. And if it doesn't end in the next few weeks, that shock could get even worse.

This all puts ASX investors in a tricky position. Almost no ASX share outside the energy sector is completely immune from the deleterious effects of sharply higher oil costs. Oil and its derivatives, including petrol, diesel, aviation fuel, and plastics, are inputs into the production of most every good and service one can think of. Not to mention the primary input of transport.

So, putting all of this together, how should investors build a defensive portfolio in 2026 that is capable of riding out this brewing storm?

Building a defensive ASX share portfolio in 2026

It might be tempting to take a look at what's happening in the Middle East and go out and buy ASX energy stocks. Or even energy-linked exchange-traded funds (ETFs) like the BetaShares Global Energy Companies ETF (ASX: FUEL). Otherwise, investors might be tempted to sell ASX shares and buy that famous 'safe-haven asset', gold.

I'm not doing any of that though.

Yes, energy shares are the one sector that is shining right now. However, energy prices are famously volatile. If this energy shock begins to choke the growth of the global economy, there is a good chance that oil prices come off the boil and fast. Recessions tend to see demand for energy collapse, as we saw back in the global financial crisis. No one knows if or when this dynamic could play out. As such, I would equate buying ASX energy shares right now to gambling.

Instead, I would continue to invest as I always do – by looking for ASX shares that possess some kind of economic moat that can protect them from inflation, high energy prices, or a recession. The best companies tend to possess at least one form of moat. That could be a cost advantage (i.e. providing a good or service at consistently lower prices than competitors), or else selling a good or service that customers find difficult to avoid using.

Moats are your ASX share portfolio shield

Telstra Group Ltd (ASX: TLS) and Woolworths Group Ltd (ASX: WOW) are two examples of companies that possess such a moat. Telstra offers vital telecommunications services to Australians with the nation's superior mobile network. Many customers simply have to use Telstra for mobile and internet, given it covers parts of the country that competitors do not. Higher energy costs and lower economic growth will not change this dynamic.

In Woolworths' case, yes, its costs are set to rise significantly with higher energy bills. But, given we all need to eat and stock our households with life's essentials, most of us will continue to shop there if it remains the cheapest and most convenient place to do so.

As such, I would ensure my ASX share portfolio is only occupied by these sorts of companies that offer some kind of moat that can protect their profits from external threats.

A final note on cash

Normally, I don't hold a lot of cash in my portfolio, besides a prudent rainy day safety net. I also don't sell ASX shares just because the market is in a downturn. However, I think as a short-term investment, cash is abnormally attractive right now. Interest rates are high, and might continue to rise. Indeed, you can apply for a term deposit with an interest rate above 5% today. A safe 5% return is not a bad way to put your surplus cash to work in an environment so rife with uncertainty as this.

The post How to build a defensive ASX share portfolio in 2026 appeared first on The Motley Fool Australia.

More reading

• 5 ASX dividend shares I'd buy for a second income
• 3 reasons I'd buy Telstra shares today
• Should you buy Woolworths shares for the 'steady dividends'?
• Where I'd invest $5,000 in ASX blue-chip shares
• Stagflation: How to position an ASX stock portfolio

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group and Woolworths Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.