‘It was just a sea of red… It’s a pretty broad sell-off.’
That’s how Hugh Dive of Atlas Funds Management explained the stock market sell-off yesterday.
Aussie markets declined around 2.2%.
And today, we may just see that selling to continue.
But before you pound that sell button, you should compare yesterdays moves to ones we’ve seen in recent months.
And today, that’s what we’re going to do.
But first, let’s talk about yesterday’s decline.
Why did the stock market plummet?
Well, it’s got to do with those dang tariffs!
Yesterday, Mr Trump hit his trading partners Brazil and Argentina.
And as the man does, he took a swing at them through a twitter post, stating:
‘Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries.’
He’s also had a crack at France.
Crickey! Talk about a turn of events.
Now Brazil and Argentina are faced with a 25% tariff on steel and 10% on aluminum. Of which they were exempt from last year.
Just as an FYI. Australia is also exempt from these tariffs. How long that will last? That’s anyone’s guess.
Anyway. Yesterday’s frenzied sell-off…
Should you be concerned?
For the time being, I’m going to suggest that the answer to that is no.
And here’s why…
A 2.2% sell-off is nothing new to the Aussie stock market.
In fact, in the last three months we’ve witnessed a few of them already.
Here’s the chart of the Aussie All Ords (XAO).
I’ve marked the major sell-offs. Each around 42 days apart.
Plus, I’m not yet concerned about a major pull back in stocks until we get into 2020.
I’m sure by now you’re aware of that. If not, well I recorded a YouTube video on that recently.
For now, just stick to your sell rules and apply them diligently. If the market is going to fall lower, your rules can help protect you from the downside.
And if the market rallies higher? Well, hopefully you’ll be well placed to profit from it.
As always, this is not a recommendation to buy or sell the index. It is an update only. I hope you found it useful.
Until next time,