Expecting a down year for the ASX? Here’s 3 ASX defensive shares to target

Defensive shares can be a strong investment decision to weather the storm of volatile markets. 

Last year, global geopolitical events contributed to market volatility, particularly in April, which saw a strong dip for ASX shares around the US liberation day tariff announcements. 

Already in 2026, we have witnessed the US capturing of Venezuelan President Maduro.

While here in Australia we might feel far removed, it’s important to understand how these kinds of geopolitical events can impact local markets. 

Interconnected markets 

Regardless of your political stance, geopolitical events can impact ASX shares by increasing global uncertainty, which prompts investors to reduce exposure to riskier assets such as equities. 

Because Australia is closely integrated into global financial markets and relies heavily on foreign investment, sudden shifts to “risk-off” sentiment can trigger capital outflows from the ASX even when the event occurs overseas. 

Such shocks often cause volatility in commodity prices and the Australian dollar. Both of these strongly influence major Australian sectors like mining, energy, and banking. 

As investors reassess growth prospects, inflation risks, and credit conditions, Australian share prices may fall due to weaker confidence rather than any direct damage to the domestic economy.

Of course, on the flip side, global events can create supply and demand shifts, which can also positively impact certain sectors.

Yesterday, the Motley Fool’s Bernd Struben covered how recent the recent events in Venezuela might influence ASX energy shares.

Defensive shares 

It’s often a fool’s game to predict the future of the stock market. But one thing that is guaranteed is there will always be periods of volatility.

However, for investors looking to position themselves with some safety, a good option is to consider defensive shares. 

Defensive stocks are typically defined as established, dividend-paying companies that earn steady profits regardless of economic conditions. 

They often operate in essential sectors like consumer staples, healthcare, utilities, and fast food, where demand stays strong even during economic downturns.

Should the ASX experience volatility in 2026, from emerging geopolitical events or unrelated economic downturn, here are three defensive shares to consider. 

Telstra Corporation Ltd (ASX: TLS)

As Australia’s largest telecommunications provider, Telstra supplies essential services such as mobile, internet, and fixed-line connectivity that households and businesses continue to use during economic downturns. 

Its large, recurring subscription revenues, strong market position, and historically reliable dividend payments make its cash flows more predictable than cyclical companies. 

Investors often view Telstra as a safer place to park capital during periods of market uncertainty.

Transurban Group (ASX: TCL)

Transurban operates tollways in Australia, Canada, and the United States. 

Demand for road transport is relatively steady. People and freight keep moving even in downturns. 

Essentially, it generates stable, long-term, inflation-linked cash flows regardless of economic cycles.

Woolworths Group Ltd (ASX: WOW)

Another option for a defensive investment is Woolworths. 

Data shows Woolworths has 38% of supermarket grocery sales nationally, which means Australians depend on the company for essential groceries. 

This dependence keeps Woolworths essential to the Australian economy regardless of market conditions. 

Its large scale, strong market position, and steady cash flows help insulate earnings from economic downturns, making Woolworths relatively resilient during periods of market volatility.

The post Expecting a down year for the ASX? Here’s 3 ASX defensive shares to target appeared first on The Motley Fool Australia.

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• 3 no-brainer ASX stocks to buy with $1,000 right now for the New Year
• How I’d build a growing passive income stream from ASX shares over 15 years
• Forecast: Here’s what $10,000 invested in Telstra shares could be worth next year
• Why I think Telstra and Woolworths shares are buys for passive income

Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Telstra Group, Transurban Group, and Woolworths Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.