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How to invest when the ASX refuses to calm down

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A man sits cross-legged in a zen pose on top of his desk as papers fly around his head, keeping calm amid the volatility.

The Australian share market has been anything but steady in 2026.

Current futures contracts are pointing to a 1.6% decline on Thursday following a weak lead from Wall Street, continuing a run of sharp moves in both directions over recent weeks.

This volatility has been driven by a mix of factors. Investors are weighing the impact of artificial intelligence, including concerns about disruption and whether massive infrastructure spending is getting ahead of demand. At the same time, surging oil prices linked to conflict in the Middle East and higher interest rates are adding further uncertainty.

So, how should investors respond when markets refuse to settle?

Defensive ASX shares

One approach is to lean into defensive ASX shares.

Companies in sectors such as consumer staples, telecommunications, and infrastructure tend to generate more stable earnings regardless of economic conditions. Businesses like Woolworths Group Ltd (ASX: WOW), Telstra Group Ltd (ASX: TLS), and Transurban Group (ASX: TCL) have historically shown resilience during periods of volatility.

Another option is to focus on quality and use market weakness as an opportunity.

High-quality ASX shares like ResMed Inc (ASX: RMD) and Goodman Group (ASX: GMG) often get sold off alongside the broader market, even when their long-term outlook remains unchanged. This can allow investors to buy strong businesses at more attractive prices. Companies with competitive advantages, strong balance sheets, and reliable earnings can often recover quickly once market conditions improve.

Taking a long-term view is key here. Short-term volatility can be uncomfortable, but it is also a normal part of investing and often creates opportunities for patient investors.

Dollar-cost averaging

Finally, dollar-cost averaging (DCA) can be a powerful strategy for Aussie investors to use in uncertain markets.

Rather than trying to time the perfect moment to invest, this approach involves investing a set amount at regular intervals. When prices fall, your money buys more ASX shares.

When prices rise, it buys fewer. Over time, this can help reduce the impact of volatility and remove the pressure of trying to predict market movements.

Foolish takeaway

In periods like this, the most important thing is to stay focused on long-term goals.

Markets may remain volatile in the near term, but history shows that disciplined investors who stay invested in ASX shares and follow a clear strategy are often rewarded over time.

The post How to invest when the ASX refuses to calm down appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Goodman Group, ResMed, and Woolworths Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group, ResMed, and Transurban Group. The Motley Fool Australia has positions in and has recommended ResMed, Telstra Group, Transurban Group, and Woolworths Group. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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