The recent sell-off of ASX stocks because of US tariffs could be a great time to invest. If I could choose when to invest, I'd obviously choose to buy when share prices are lower. Prices don't drop for no reason – investors are concerned about a possible recession, or at least a slowing of global growth.
With global trade between the US and China suddenly looking quite precarious, there are questions about what's going to happen next.
There are some sectors that have suffered through some pain, which could be 'buy-the-dip' ideas. Defensive ASX shares could also be good investments.
I'll run through some areas where I see opportunities.
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Recession ASX stocks
Some businesses may be less vulnerable during this time because of their ability to generate consistent earnings throughout the coming period, whatever happens next.
I would describe these businesses as ones that provide essential products or services.
Telco Telstra Group Ltd (ASX: TLS), energy infrastructure business APA Group (ASX: APA), supermarket business Coles Group Ltd (ASX: COL) and investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) are some names that come to mind.
They may be resilient and reassuring investments to own during this uncertain time.
Interest rate-sensitive stocks
There are some businesses that have been harmed by higher interest rates, such as real estate investment trusts (REITs) and ASX retail shares.
While predictions aren't certain to come true, multiple economists are thinking that the Reserve Bank of Australia (RBA) will cut rates in May, with more cuts possible later this year.
If the RBA does reduce rates multiple times this year, I think the businesses harmed by high interest rates could be the ones that benefit the most.
I'm thinking of ASX stocks like Nick Scali Limited (ASX: NCK), Accent Group Ltd (ASX: AX1) Centuria Industrial REIT (ASX: CIP), Charter Hall Long WALE REIT (ASX: CLW), and Centuria Capital Group (ASX: CNI).
ASX mining stocks
One of the main buyers of resources globally is China, so any noticeable economic pain there could mean a hit to demand. However, if the Chinese economy is negatively impacted, I'd expect the Asian superpower to launch stimulus to support its different industries, which could then support commodity prices.
I believe declines for companies like BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) and Sandfire Resources Ltd (ASX: SFR) are longer-term buying opportunities.
Hard-hit
Some ASX stocks have been sold off heavily during this period. While investor fears are understandable, I don't believe that the negatives of the trade war situation will last forever. Current declines could be a good time to be contrarian.
The ones that have seen some of the biggest declines could be contenders for a recovery, such as GQG Partners Inc (ASX: GQG) and Global X Fang+ ETF (ASX: FANG).
