In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week on a positive note. At the time of writing, the benchmark index is up 0.4% to 7,040.4 points.

Four ASX shares that have failed to follow the market higher are listed below. Here’s why they are sinking:

Carsales.Com Ltd (ASX: CAR)

The Carsales share price is down 10.5% to $17.45. This follows the successful completion of the institutional component of its $600 million pro rata accelerated renounceable entitlement offer. Carsales raised $428 million at a 12.9% discount of $17.00. The auto listings company will now seek to raise a further $172 million from retail shareholders. These funds are being used to acquire a 49% stake in United States-based business Trader Interactive.

Incitec Pivot Ltd (ASX: IPL)

The Incitec Pivot share price is down 3% to $2.34. This follows the release of a weaker than expected half year result. The industrial chemicals company posted a 6.7% decline in revenue to $1,724.1 million and a 30.8% decline in earnings before interest and tax (EBIT) to $110 million. According to a note out of Goldman Sachs, its analysts were forecasting revenue of $1,825 million and EBIT of $171 million.

Infinity Lithium Corp Ltd (ASX: INF)

The Infinity Lithium share price has crashed 66% lower to 6.5 cents. Investors have been selling the lithium explorer’s shares following an update on its San José Lithium Project in Spain. According to the release, Infinity Lithium has received notification that the Investigation Permit Valdeflorez (PIV) application has been cancelled at the project. This was due to the urban unfeasibility of the research permit. This essentially means the project has been deemed to be too close to the local town. Infinity Lithium will appeal the decision.

Nuix Ltd (ASX: NXL)

The Nuix share price is down 8% to $3.18. This follows a joint investigation by The Sydney Morning Herald, The Age, and The Australian Financial Review. That investigation raises questions about the technology company’s governance and financial accounts. Nuix has responded by defending its business and processes. It commented: “Nuix has in place robust processes to measure forward indicators of performance in order to ensure that it keeps the market fully informed and has done so on a timely and regular basis.”

More reading

• These ASX tech shares are down 50% from their 52-week highs
• Why the Infinity Lithium (ASX:INF) share price is crashing 67% lower
• ASX 200 up 0.45%: Carsales sinks 10%, Aristocrat Leisure jumps
• Carsales (ASX:CAR) share price down 7% after raising $428 million
• Incitec Pivot (ASX:IPL) share price sinks 5% on half year update

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended carsales.com Limited and Nuix Pty Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It’s no secret that the ASX tech shares have not had the easiest of months. Or the easiest of years so far, come to think of it. After a blazing 2020, and 2019 before that, investors have been doing some hardcore profit-taking over the past month or two. As a guiding light, the S&P/ASX All Technology Index (ASX: XTX) is down 13.5% in 2021 so far.

But some ASX tech shares have fared far worse than that. Here are 4 such shares that are now down 50% or more from their 52-week highs today.

Afterpay Ltd (ASX: APT)

Afterpay has copped a beating over the past month or so. After topping out at $160 a share back in February, Afterpay is today trading at $85.55 a share. That’s a drop of 46.5% (ok, not quite 50%, but tomayto, tomato). It’s also the lowest level the buy now, pay later pioneer has hit since October last year. Even so, Afterpay reported some breakneck numbers in its recent quarterly update, so perhaps some investors might be thinking this sell-off is overdone. Only time will tell.

Zip Co Ltd (ASX: Z1P)

Afterpay’s fellow BNPL provider, Zip has also been getting hammered of late. After rising as high as $14.53 a share back in February, Zip is now exploring prices around the $7 mark today. As some quick maths might tell you, that’s a drop of just over 51%. Like Afterpay, Zip seems to have been caught up in a sharp reduction in the leniency investors seem willing to extend to high-growth businesses like Zip right now.

Appen Ltd (ASX: APX)

Appen is another ASX tech share that has not been feeling the love of late. In fact, Appen investors have suffered far more than the above two companies. This human-annotated dataset company topped out at $43.66 back in August last year. But it has been down, down for Appen ever since. Today, the shares are asking for a price of just $11.12, a massive ~75% loss from its old high. Investors seem to have been royally spooked by a series of updates from the company. These indicate a rocky road for its earnings growth prospects over the next few years.

Nuix Ltd (ASX: NXL)

A final poor ASX tech performer in recent times is this newer addition to the ASX. Nuix is a tech company that specialises in consumer data. It hit the ASX boards last year in a much-trumpeted IPO in December. But things have not been kind to Nuix since. It traded at a price of roughly $8 on its IPO day and even got up to a high of $11.86 a share in January. But today, Nuix is swapping hands for $3.09 at the time of writing. That’s an Appen-esque drop of more than 72%. Revised earnings guidance and internal issues seem to be behind this company’s s poor post-IPO performance.

More reading

• The Appen (ASX:APX) share price is 75% lower than its 52-week high
• US market bounces back, ASX 200 tech shares on watch
• These are the 10 most shorted shares on the ASX
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• Has COVID-19 killed the ASX WAAAX shares?

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Appen Ltd, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia has recommended Nuix Pty Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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S&P/ASX 200 Index (ASX: XJO) retail shares stand to be among the big beneficiaries of the new Federal budget, according to one fund manager.

The budget, unveiled last week, is widely seen as offering something to almost everyone… except for Australia’s future taxpayers.

Indeed, the government is opening the spending taps wide. So wide, that AMP Capital’s chief economist, Shane Oliver, estimates total government spending (spent and projected) since the early days of the COVID-19 outbreak has now hit around $350 billion. (More budget coverage here.)

Commenting on the Federal budget, Ophir Asset Management senior portfolio manager Andrew Mitchell said (quoted by the Australian Financial Review):

It was certainly a spendathon, and the Frydenberg treasury will likely go down as one of the biggest spenders in history. This perhaps shouldn’t be surprising as they have an election to win and an economy that still needs to play catch-up due to COVID-19.

Mitchell said he was caught off-guard by the government’s decision to extend the $7.8 billion low and middle-income tax offset for an extra year. Some 10 million taxpayers are eligible for the end-of-year rebate of up to $1,080.

He added, “The boost to household consumption…should see retailers remain strong.”

Two of the ASX 200 retail shares Mitchell singled out that should benefit are Harvey Norman Holdings Ltd (ASX: HVN) and JB Hi-Fi Ltd (ASX: JBH).

Cashed up consumers

It’s not just the latest extension of tax cuts that look set to offer another tailwind for ASX 200 retail shares.

Australian consumers also remain cashed up on the back of temporary boosts to JobSeeker and the recently terminated JobKeeper program. And with domestic borders only now fully reopening and international travel restrictions remaining in place, many consumers haven’t been spending as much as they would have in ‘normal’ times.

Which brings us back to…

Two ASX 200 retail shares tipped to benefit

Over the past full-year, JB Hi-Fi has handily outperformed the benchmark. Shares in the consumer electronics retailer are up 43% in 12 months. By comparison, the ASX 200 gained 29% in that same time. Year-to-date the JB Hi-Fi share price has gone the other direction, slipping 2% so far in 2021.

At the current price of $48.74 per share (up 3% in intraday trading today), JB Hi-Fi has a market cap of $5.6 billion. The ASX 200 retail share pays a dividend yield of 5.54%, fully franked.

Harvey Norman’s share price is also marching higher today.

Shares in the discretionary retailer are up 2% in intraday trading giving shareholders an 86% gain over the past 12 months. Harvey Norman is beating the benchmark in 2021 as well, with shares up 11% in 2021.

At the current price of $5.29 per share, Harvey Norman has a market cap of $6.6 billion and pays a dividend yield of 7.20%, fully franked.

More reading

• 2 ASX dividend shares to buy with yields above 4%
• The ASX shares poised to benefit from new spending in the 2021 federal budget
• JB Hi-Fi (ASX:JBH) share price lower despite new appointment: Time to buy?
• ASX 200 Weekly Wrap: Shares have average week but a great month
• Retail just changed. Forever…

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has slipped 5% since releasing its first-half results for FY21 on 5 May. 

Its results highlighted an impressive 45% increase in statutory profit after tax and 28% increase in cash earnings compared to a year ago. ANZ also went ex-dividend last Monday, with eligible shareholders expected to receive an interim dividend of 70 cents per share. This greatly towers over the 60 cents FY20 dividend paid out last year. 

However, the seemingly impressive figures were not enough to buoy its share price, which has retreated back to 2-month lows of around $27.40. 

Today, analysts at Macquarie have flagged ANZ as potentially the better big bank to buy. Here’s why the ANZ share price might have an edge against other banks. 

Why the ANZ share price might be better than other banks 

In Macquarie’s review of first-half bank results, the broker was disappointed by the fact that pre-provision earnings excluding markets income had continued to decline.

While banks were able to deliver impressive double digit growth against a year ago, Macquarie notes that compared to the FY20 average, a majority of banks actually experienced a revenue decline. 

The broker explains that the recent selloff across both the ANZ share price and broader big four banks was driven by the lack of pre-provision earnings growth. The market was expecting an improvement in this area, which failed to materialise. 

Macquarie highlights ANZ as the only bank that didn’t experience a revenue (excluding markets income) decline. Its analysts believe the bank continues to better relative value compared to peers, maintaining an outperform rating with a $30.50 target price. 

Despite the outperform rating, the broker warns that its outlook for the second half of FY21 appears less optimistic. Macquarie pointed to factors such as a lift in expenses and slowing balance sheet momentum that could weigh against expectations. 

More reading

• Leading brokers name 3 ASX shares to buy today
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• The Bendigo Bank (ASX:BEN) share price has outperformed the big four
• ASX 200 up 0.8%: Xero continues to slide, big four banks rise
• Macquarie (ASX:MQG) share price unfazed amid questions over climate conflict

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The AVZ Minerals Ltd (ASX: AVZ) share price has been on fire on Monday.

In afternoon trade, the lithium explorer’s shares are up 14% to 16.5 cents.

Why is the AVZ Minerals share price racing higher?

Investors have been fighting to get hold of the company’s shares following the release of an update relating to its Manono Lithium and Tin Project in the Democratic Republic of the Congo (DRC).

According to the release, all the required documentation to support its application for the Manono Project mining license has been lodged and accepted for consideration by the Cadastre Minier in Kinshasa.

The documentation and formal application, which were submitted by AVZ’s majority-owned DRC company, Dathcom Mining SA, will now be assessed by the Government prior to approval of the granting of the mining licence as soon as practicably possible.

What now?

While there’s still a long road ahead, management appears optimistic that everything is in place so that it can maintain its schedule to deliver the first spodumene concentrate on train by the first quarter of 2023.

AVZ’s Managing Director, Mr Nigel Ferguson, said: “Lodging our formal application for a Mining Licence for the Manono Project is yet another significant milestone for the Company. It marks the culmination of our highly strategic and well executed exploration programme and is another signal that the Company is rapidly advancing towards the construction phase of our mining project and, ultimately, moving into production.”

“We expect granting of the Mining Licence for the Manono Project to be expedited by the DRC Government so that we can maintain our construction schedule to deliver the first SC6 on train by Q1 2023. A Mining Licence will also allow the Company to quickly progress the Manono Project to a ‘bankable’ study level, set as a condition precedent and as required by prospective financiers of the Manono Project.”

Mr Ferguson concluded: “The optimised DFS [definitive feasibility study] being completed will provide an updated financial projection on the Manono Project incorporating the results of the optimised mine redesign which is currently underway, the FEED study which is progressing smoothly under the guidance of Mincore Pty Ltd, and conditions relating to the Special Economic Zone for Manono (MSEZ) which is progressing well.”

More reading

• What happened to the AVZ Minerals (ASX:AVZ) share price today?
• Why the AVZ Minerals (ASX:AVZ) share price is sinking 11% today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Syrah Resources Ltd (ASX: SYR) share price is edging higher in afternoon trade. This comes after the company announced a positive update on the production of its natural graphite active anode material (AAM).

At the time of writing, the graphite producer’s shares are swapping hands for 99 cents, up 1.54%.

What did Syrah announce?

In its release, Syrah advised it has achieved the first fully-integrated production of AAM at its Vidalia operation in the United States. This follows the company’s installation and commissioning of its commercial scale furnace in late March.

Syrah highlighted that it is now the only vertically integrated company outside China to produce the graphite material.

The milestone signifies Syrah’s progress on advancing its qualification process along with supporting commercial discussions. The thermal treatment of coated anode precursor in a furnace is the final stage of processing graphite to produce an anode material for use in lithium-ion batteries.

Syrah managing director and CEO Shaun Verner commented:

Syrah is committed to becoming a pre-eminent, large scale supplier of natural graphite AAM. The fully integrated production of on-specification AAM at Vidalia confirms our position as the most progressed vertically integrated natural graphite AAM supply option outside of China for USA and European battery makers and OEMs.

In addition, the company advised it was on track to expand its current production capacity at Vidalia. A final investment decision for the construction of a 10ktpa AAM facility is planned for the second half of 2021. This is subject to end-customer commitments and other partnerships.

Syrah share price snapshot

Over the past 12 months, the Syrah share price has accelerated more than 260% but is relatively flat on year-to-date performance. The company’s shares reached a 52-week high of $1.37 earlier this year.

Based on today’s price, Syrah commands a market capitalisation of around $490 million, with approximately 497 million shares outstanding.

More reading

• Why Corp Travel Management, Imugene, MoneyMe, & Syrah are pushing higher
• Why the Syrah (ASX:SYR) share price is moving today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is having a pretty decent start to the week. At the time of writing, the ASX 200 is up 0.3% to 7,032 points. But one ASX share that isn’t contributing to this rise is Telstra Corporation Ltd (ASX: TLS). Telstra shares have gone backwards today, down 0.58% to $3.43 a share. At this level, the ASX telco is now down more than 3% from the new 52-week high that it reached back on 5 May. In saying that, the Telstra share price is still up around 14% year to date, so shareholders can’t complain too much.

Even so, it does beg the question: why is Telstra falling today when the ASX 200 is rising?

Well, one possible reason could be a squabble over the National Broadband Network (NBN). According to a report in the Australian Financial Review (AFR), the NBN has called an “emergency meeting” today with internet providers. These include Telstra, as well as the Singtel-owned Optus, Vocus Group Ltd (ASX: VOC), and TPG Telecom Ltd (ASX: TPG). The report calls this meeting an “attempt to appease growing anger… about problems that have worsened due to a bungled change to a new field operations model and work scheduling system”. The resellers also accused the NBN of harming their brands through poor customer service standards.

Telstra’s NBN troubles

The report also outlines accusations that there are “constant problems” with NBN connections that use the HFC (Hybrid Fibre Coaxial) cable network to provide service. NBN has stated that a COVID-induced shortage of chips needed for modems is to blame. But the report quotes Optus vice president Andrew Sheridan, who dismisses these claims:

It has known for the last ten years that it needed to move all of these customers onto the cable platform, so for them to just say ‘Oh we’ve hit trouble with supply of chipsets’ is not good… It is just leading to terrible customer experiences, because there are some people who cannot connect to broadband, and there are no alternative options available. Then we are the ones that take the reputational hit with customers and get the complaints to the ombudsman.

Telstra has voiced similar concerns.

This could be behind the source of investors disquiet over Telstra today. It’s not just Telstra shares either. Both the Vocus and TPG share prices have also taken hits today, which indicates that it is indeed a sector-wide sell-off going on.

Shareholders might be frustrated with these developments, seeing as it doesn’t look like it’s a problem that was caused, or can be fixed by, the telcos themselves. But that’s the way the cookie sometimes crumbles in this space. At the current share price, Telstra has a market capitalisation of $40.85 billion.

More reading

• Is ASX 200 share market volatility always a buying opportunity?
• The latest ASX shares that top brokers have upgraded to “buy”
• Can China really crash the iron ore price?
• Why the Strike Energy (ASX:STX) share price is charging higher
• ASX 200 up 0.45%: Carsales sinks 10%, Aristocrat Leisure jumps

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week on a positive note. At the time of writing, the benchmark index is up 0.3% to 7,037 points.

Four ASX shares that are climbing more that most today are listed below. Here’s why they are storming higher:

AnteoTech Ltd (ASX: ADO)

The AnteoTech share price is up over 12% to 33.7 cents. Investors have been buying the biotech company’s shares after it announced the finalisation and signing of a manufacturing contract for its COVID-19 Antigen Rapid Test (ART) with Spain-based contract manufacturer Operon. AnteoTech and Operon have agreed to an exclusivity period of three years, during which Operon has the first right of refusal to manufacture the test to supply the European market.

Aristocrat Leisure Limited (ASX: ALL)

The Aristocrat Leisure share price is up 4% to $38.93. The catalyst for this was the release of a first half update by the gaming technology company. According to the release, Aristocrat Leisure expects to report a 12% increase in normalised NPATA to $412 million for the half. This has been driven by stronger than expected performances from both its Gaming and Digital businesses.

BWX Ltd (ASX: BWX)

The BWX share price is up 2.5% to $4.73. This morning the personal care products company announced an agreement to acquire online retailer Flora & Fauna for up to $30.8 million. Flora & Fauna is a Sydney-based online retailer that is focused on selling vegan, ethical, and sustainable products. The company is forecasting revenue in the range of $16.4 million and $17.1 million in FY 2021.

Xero Limited (ASX: XRO)

The Xero share price is up 6% to $119.05. This gain appears to have been driven by a combination of bargain hunters swooping in following a sharp decline last week and a bullish broker note out of Morgan Stanley. In respect to the latter, the broker has retained its overweight rating but trimmed its price target to $135.00. Morgan Stanley believes the company’s reinvestment plan is the correct strategy to maintain its leadership position and support its growth.

More reading

• Why the Anteotech (ASX:ADO) share price is soaring 10% today
• ASX 200 up 0.45%: Carsales sinks 10%, Aristocrat Leisure jumps
• Leading brokers name 3 ASX shares to buy today
• Aristocrat Leisure (ASX:ALL) share price jumps 9% on profit update
• Why the BWX (ASX:BWX) share price is on watch this morning

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended BWX Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why AnteoTech, Aristocrat Leisure, BWX, & Xero shares are storming higher appeared first on The Motley Fool Australia.

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It’s been an interesting year for copper prices, which rocketed to an all-time high last week. This comes on the back of strong demand for copper’s widespread application, including in the electrical (including electric vehicles) and construction industries.

Below we take a closer look at the copper price and the major ASX copper shares.

Copper spot price near all-time high

Investor interest in the brownish-orange metal has picked up of late, with copper hitting a record high price of US$4.76 per pound last Wednesday. Furthermore, copper prices have jumped by around 32% so far in 2021. 

The recovery of the world economy from the impacts of COVID-19, along with supply constraints, has driven copper prices to extraordinary levels. In addition, the demand for electric vehicles, which require copper as a key component of their batteries, has soared.

At today’s prices, copper is being exchanged for US$4.67 per pound, up 0.2% for the day.

What are the ASX copper shares?

At current, there are 11 copper-focused ASX-listed companies. While the majority of these have market capitalisations of less than $200 million, there are three notable big players. These are OZ Minerals Limited (ASX: OZL), Sandfire Resources Ltd (ASX: SFR), and Aeris Resources Ltd (ASX: AIS).

Unsurprisingly, the share prices of the three largest ASX copper miners have accelerated in recent times.

OZ Minerals, the ASX’s biggest copper company by market cap, has seen its shares surge by around 186% over the past 12 months. Year-to-date performance sits at above a 31% gain. Notably, the OZ Minerals share price reached an all-time record high of $27.15 just last week. Currently, the company’s shares are trading 1.39% lower for the day at $24.81.

Sandfire Resources, the second-largest ASX copper company, has also stormed higher of late. The Sandfire share price has rallied by around 74% since this time last year and has advanced by around 40% year to date. The company is very close to breaking its multi-year high of $7.83, which was also set last week. At the time of writing, its shares are trading at $7.46.

Meanwhile, Aeris Resources shares have exploded by around 400% on their one-year price chart. The strong growth could be partially attributed to the fact the company’s market cap is considerably smaller than OZ Minerals and Sandfire Resources. At today’s prices, Aeris Resources is valued at around $307 million, compared to $8.2 billion and $1.3 billion for OZ Minerals and Sandfire, respectively.

The Aeris Resources share price hit a new multi-year high of 18 cents today before retreating to its current level of 16 cents.

Where to next for copper prices?

A number of analysts have put forward their views regarding future copper prices.

On 4 May, Bank of America commodity strategist Michael Widmer highlighted that the current copper supply covers just 3 weeks of global demand. He said (quoted by CNBC):

Linked to that, we forecast copper market deficits, and further inventory declines, this year and next. With (London Metal Exchange) inventories close to the pinch-point at which time spreads can move violently, there is a risk backwardation, driven by a rally in nearby prices, may increase.

According to Bank of America, copper prices could hit US$20,000 per metric tonne by 2025.

The following day, David Neuhauser, founder and managing director of United States hedge fund, Livermore Partners told CNBC:

I think copper is the new oil and I think copper, for the next five to 10 years, is going to look tremendous with the potential for $20,000 per metric ton.

We think there are some very solid small cap companies that have massive production potential, and valuations are attractive.

More reading

• The Aeris (ASX:AIS) share price is flying 20% on ‘massive’ copper find
• Why the Helix (ASX:HLX) share price is rocketing 129%
• The ASX shares poised to benefit from new spending in the 2021 federal budget
• The ASX miners caught in the FOMO trade as copper smashed record highs
• Brokers say “buy” these 3 ASX shares even as they trade near 52-week highs

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post What has been happening with ASX copper shares? appeared first on The Motley Fool Australia.

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Over the past few weeks, ASX investors have become acquainted, or I should say reacquainted, with volatility. Yes, the S&P/ASX 200 Index (ASX XJO) did reach a record high on Monday last week. But it was a choppy road to get there. And just after Monday’s record high, ASX 200 shares had gone backwards by close to 3% by Thursday.

As the new week starts today, the ASX 200 looks to be on the rise again and approaching its new high watermark once more. But it looks as though volatility is here to stay too, at least in the short term. As we discussed at length, it was renewed fears over US inflation that stirred the pot with the volatility we saw over last week. And the worst hit ASX shares were those in the ASX tech sector. Take Afterpay Ltd (ASX: APT). It managed to lose more than 12% of its value since Monday last week, not helped by the ~1% loss today. Other ASX tech shares that have taken similar beatings over the past week include Xero Limited (ASX: XRO), Zip Co Ltd (ASX: Z1P) and Appen Ltd (ASX: APX).

It’s been a bit of a rollercoaster ride, owning any of these companies over the past month (or even week) alone. Those investors who love to follow the ‘value investing‘ playbook might be telling you to ‘buy the dip’ or something similar today. You know, ‘buy low, sell high’ and all. But is volatility always a buying opportunity?

Volatility and ‘buying the dip’

Well, that’s not the easiest question to answer. There are a few questions you might want to ask yourself before you rush into these shares or any other shares that are looking relatively cheap to what they were a few months, or even weeks ago.

Firstly, asking ‘why is this volatility happening?’ is probably a top idea. Shares sell off for all sorts of reasons. Investors might have lost interest in the company. The market might not like a company’s management team’s new plan for its business. A company might be competing in a dying industry. Or, in the case of ASX tech shares recently, the prospects of interest rates and inflation might be spooking investors in one particular sector. The list goes on. Obviously, not all of these reasons to sell a share mean it’s a good idea. Some of these issues might be temporary, meaning that it might be a better idea to buy more shares, rather than sell out. If it turns out that the fears over inflation and interest rates are unfounded, this may apply to the ASX tech space right now.

But on the other hand, you want to get out as fast as possible if there is truly a long-term, structural problem with a business that will result in it shrinking, rather than growing over time.

Volatility can be your friend. Sometimes shares just drop because the market is temperamental and emotional at times. But not always. Sometimes things drop for a good reason. Knowing the difference can make a big difference to your ASX share portfolio over time.

More reading

• The latest ASX shares that top brokers have upgraded to “buy”
• Can China really crash the iron ore price?
• Why the Strike Energy (ASX:STX) share price is charging higher
• ASX 200 up 0.45%: Carsales sinks 10%, Aristocrat Leisure jumps
• Why the Chorus (ASX:CNU) share price is moving higher

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, Appen Ltd, Xero, and ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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