Yesterday marked a day for investors to forget as the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) experienced its biggest one-day sell-off since early August as sentiment was controlled by fears that the US Federal Reserve might begin reducing stimulus as early as this month.
Improving jobs data in the US led Wall Street to its fourth consecutive day of trading in the red as it increased expectations that the Fed could begin tapering its US$85 billion a month stimulus program. The ASX 200 followed, dropping to its lowest level since mid-October where it fell 1.4% or 75.8 points to close at just 5198. So far in December, the index has lost 2.3%.
Whilst a profit warning by Qantas (ASX: QAN) saw the stock fall 11.2% (hitting a year low of $1.07 per share), it was financial services that was the worst performing sector for the day. The banks put the market in reverse with Westpac (ASX: WBC) falling 2.7% to close at $31.49 whilst Commonwealth Bank (ASX: CBA), NAB (ASX: NAB) and ANZ (ASX: ANZ) also shed between 1.7% and 2.1%.
Meanwhile, Suncorp Group (ASX: SUN) lost 3.3%, AMP (ASX: AMP) dropped 3.3% and Insurance Australia Group (ASX: IAG) fell 2.8%.
Perhaps surprisingly, the big miners also fell for the day despite climbing commodity prices and a falling dollar. The dollar has fallen to around US90c which is a relief for the miners after years of a high Australian currency. Whilst BHP Billiton's (ASX: BHP) fall was marginal, losing just 2c to close at $36.78, Rio Tinto (ASX: RIO) fell 0.4%.
The losses were not limited to the financial services or mining sectors however, with GDP data confirming that investment in the resources sector continues to fall. Mining services companies copped the brunt of the pain, with Forge Group (ASX: FGE), Transfield Services (ASX: TSE) and Boart Longyear (ASX: BLY) all dropping between 6.9% and 8.5%.
Furthermore, telecommunications behemoth Telstra (ASX: TLS) and supermarket giants Woolworths (ASX: WOW) and Wesfarmers (ASX: WES) shed between 1.3% and 1.8%.
Foolish takeaway
It is painful to watch the value of our holdings plummet like they did yesterday, however, it can also create an incredible opportunity to buy stocks at discounted prices to give you a chance at even greater long-term rewards. As such, long-term investors should be on the lookout for quality companies trading at bargain prices rather than focusing on their short-term losses.
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