Foolish Preview: ASX likely to fall and bargain hunters rejoice

Our market likely to open lower after US markets fell overnight

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published June 26, 2012 8:45 am AEST

Shares on Wall Street have ended sharply lower overnight, with The Dow Jones Industrial Average falling 1.1%, S&P 500 Index down 1.6% and the Nasdaq Composite Index sliding a whopping 2%.

The news – as usual these days – was all about Europe, with Greece's Finance minister resigning because of ill-health and Spain becoming the fourth state to officially request help for its banks. Rating agency Moody's subsequently downgraded the ratings of 28 Spanish banks.

Legendary investor, George Soros, has suggested failure at the European summit later this week could be fatal to the Euro.

In commodities news, spot gold was up 0.8% to US$1,583.99 an ounce, with oil, silver and copper up slightly.

The Australian dollar was trading at parity this morning, having fallen below US$1 overnight.

A gloomy day ahead

The ASX SPI futures are down 34 points this morning, suggesting the ASX market could fall by around 0.8%. It could be another bumpy day for the S&P / ASX 200 (Index: ^AXJO) (ASX: XJO).

Market losses are likely to be compounded by tax loss selling as we approach the end of the financial year and low volumes due to the looming school holidays.

Billabong International Limited (ASX: BBG) founder and major shareholder, Gordon Merchant, has said that he would now consider another lower bid for the company, and felt "bad" for rejecting a $4 bid just four months ago. Institutional shareholders have called for his removal from the board. Billabong's shares hit an all-time low yesterday, falling to 96 cents.

Fairfax Media Limited (ASX: FXJ) is likely to be in the news again, either because of fallout from the resignation yesterday of three senior editors as the stock price hit new lows, or Gina Rinehart's push to grab at least one board seat. The Australian Financial Review has reported that Ms Rinehart has threatened to sell her 18.7% stake, if the stalemate between her and the board persists.

Kerry Stokes' is reportedly planning his own bid for Consolidated Media Holdings Limited (ASX: CMJ), through his Seven Group Holdings Ltd (ASX: SVW), which won't impress News Corp (ASX: NWS, ASX: NWSLV) much.

Foolish take-away

Today will be rough on the portfolio, but now is the time for Foolish investors to have their shopping lists out and be on the hunt for share-market bargains.

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Motley Fool contributor Mike King doesn't own shares in any companies mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool'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). Authorised by Bruce Jackson.

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