Foolish Preview: ASX likely to fall and bargain hunters rejoice

The market will test your mettle today – take advantage of shares on sale

Scott Phillips (TMFGilla)

Scott Phillips is The Motley Fool’s Chief Investment Officer in Australia. He is Advisor of The Fool’s flagship investment service, Motley Fool Share Advisor and the Portfolio Manager of Motley Fool Everlasting Income and Premier Portfolio, as well as running our most premium service, Motley Fool Platinum. He is passionate about investing, having managed his own portfolio for over 15 years. A dyed-in-the-wool Fool (in the best way), he has been a member of The Motley Fool since 1999. Scott holds a Bachelor of Commerce (Management) and a Graduate Diploma of Accounting. Before joining The Fool, Scott worked in various Sales and Finance roles in industry, which has allowed him to see the good, bad and the ugly of corporate management close-up. Giving him a great understanding of the way businesses run – and what separates the business wheat from the chaff – Scott wholeheartedly agrees with Warren Buffett when he said he was a ‘better investor because I am a businessman and a better businessman because I am an investor’. Scott left a successful career to follow his passion – helping our members achieve the best possible investment returns, and helping Australians learn to better manage their money. It’s no surprise he ended up at The Motley Fool.

Published May 31, 2012 9:55 am AEST

Another down day on the US markets overnight means a likely very soft start for the ASX this morning.

All three of the major US indices lost over 1%, with the Dow Jones Industrial Average off 1.3%, the S&P 500 giving up 1.4% and the Nasdaq losing 1.2%.

The news – as usual these days – was all about Europe, with markets starting to shift focus from Greece to Spain, as commentators and market participants mulled a possible Spanish exit from the Euro.

Oh, and Facebook (Nasdaq: FB) fell another 2.2% to US$28.19, to close just shy of $10 off its IPO price

The Australian dollar was trading at a six-month low this morning and was buying around 97.01 US cents at 9.30am today.

A gloomy start

Unsurprisingly, the ASX SPI futures are down 43 points this morning, representing a loss of 1.1%. It could be another bumpy day for the S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) and the All Ordinaries (Index: ^AORD) (ASX: XAO) today.

In early news, David Jones (ASX: DJS) has released third quarter sales which was yet another quarter of lower sales, albeit the decline is stabilising somewhat. Paul Zahra, DJs CEO, confirmed that previous profit guidance of a 35-40% decline was still likely. While it might have some shareholders breathing a sigh of relief that the numbers weren't worse, those hoping for a turnaround will be disappointed – as will shareholders of competitor Myer (ASX: MYR) and other discretionary retailers.

The Australian has reported that Telstra (ASX: TLS) might be running the ruler over Nine Entertainment, as the telecommunications giant continues its push to become an integrated content provider. If it does go ahead, shareholders will be hoping the company doesn't overpay for the struggling network – and Telstra has form on questionable acquisitions.

ANZ likely to miss its Asian target

Meanwhile, in a blow to its Asian expansion plans, an analysis by Citigroup, cited in the Australian Financial Review, suggests ANZ (ASX: ANZ) is likely to miss its self-imposed target of having 20% of its earnings from non-Australian and New Zealand sources by this year. With earnings growth in Australia likely to be hard to come by in the medium term, ANZ had been the most aggressive of its peer group (Commonwealth Bank (ASX: CBA), National Australia Bank (ASX: NAB) and Westpac (ASX: WBC)) in seeking offshore growth opportunities. If the company can pull it off, it will be a master-stroke – but it wouldn't be the first (or second or third) bank to withdraw from international expansion with its fingers burnt.

Foolish take-away

Today will be rough on the portfolio, but with the ASX capping a poor May, now is the time for Foolish investors to have their shopping lists out and be on the hunt for sharemarket bargains.

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Scott Phillips is an investment analyst with The Motley Fool. He owns shares in David Jones and Telstra. You can follow Scott on Twitter @TMFGilla. Take Stock is The Motley Fool Australia's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691).

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