The ASX share market is seeing more ups and downs than a yo-yo. I think this is an opportune time to invest.
Another day of big movements of share prices follow the release of the latest inflation number in the US. At the moment, the ASX 200 Index (ASX: XJO) is up by 1.5%.
Monthly inflation data in the US for September showed an 8.2% increase over 12 months. The inflation was stronger than expected, though it was down slightly compared to August.
The ‘core’ inflation figure, which removes the effects of food and energy costs, saw the highest increase since 1982. This seemingly implies that inflation is widespread in the economy.
What does this mean for ASX shares?
One of the strongest ever inflation numbers recorded? Share prices go up, of course. Sometimes price movements don’t quite make sense.
Perhaps some investors were expecting worse. Maybe people like that inflation seems to have peaked in the low 8s. The news from the UK that the government may be dropping some of its controversial budget measures may also be a positive for investors.
However, in reality, I think it means that the US Federal Reserve will continue to quickly increase interest rates to try to tame inflation there.
This has wide-reaching effects because the US dollar is what many things are priced to – such as international debt and commodities. It also means that other central banks may need to increase rates further than they wanted to, so that their currencies don’t go down in value. Remember, Australia buys a lot of its goods and oil from overseas markets.
Where to invest?
There isn’t necessarily going to be a ‘safe’ place from the volatility. Cash (in the bank) doesn’t go down in actual value, though inflation does reduce its worth over time.
I think that the much-lower share prices we’re now seeing are very interesting.
It’s impossible to say where the bottom is for each individual ASX share, but I do know that many prices are a lot lower. I think they’re worth taking advantage of.
I see long-term value in retail shares like Wesfarmers Ltd (ASX: WES) and Premier Investments Limited (ASX: PMV). ASX tech shares have been sold off hard, I think in the long-term names like Xero Limited (ASX: XRO) and Airtasker Ltd (ASX: ART) can continue to grow.
Some industrial property ASX share names have fallen heavily, and I think they could be solid long-term picks, particularly for income, such as Centuria Industrial REIT (ASX: CIP) and Brickworks Limited (ASX: BKW).
Exchange-traded funds (ETFs) could also be a good place to go hunting, such as Betashares Global Cybersecurity ETF (ASX: HACK) and VanEck Morningstar Wide Moat ETF (ASX: MOAT).
I think lower share prices are a great time to go investing, which is what I’ve been doing.
