We’ve so far avoided a UK stock market crash in the wake of President Trump’s trade tariffs, though the FTSE 100 did enter correction territory with a brief drop of more than 10%. The S&P 500 fell further, but so far it’s avoided a technical crash of 20% or more.
Whatever term we use to describe a stock market fall, I firmly believe one thing. These are good times for stock market investors, not bad times. We’re in it for the long term and we want to buy shares when they’re cheap, right?
Chip makers down
I’m drawn to ASML Holdings (NASDAQ:ASML) right now. The Dutch developer of advanced chip fabrication technology reported disappointing orders for the first quarter of fiscal 2025, at just €3.9bn. That’s well short of €7.1bn in the final quarter of 2024.
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The company spoke of industry-wide uncertainty caused by tariff turmoil. Its US-listed shares took a further dip, and we’re now looking at a 12-month fall of around 30%.
CEO Christophe Fouquet has previously said order bookings “are not necessarily an accurate reflection of the business momentum.” He added that ASML will soon stop providing those numbers.
Long-term health
Quarterly sales still came in pretty much bang on expectations at €7.7bn, soundly beating the previous year’s Q1 total of €5.3bn.
The big question is how much this short-term upheaval is likely to damage ASML’s long-term prospects.
It’s the only supplier of extreme ultraviolet (EUV) photolithography equipment. That’s the technology needed for today’s smallest-scale chip production, which is in big demand for artifical intelligence (AI) development.
It’s really not easy for firms to get in on the act and start up development and production to the same standards in the US, no matter how big the tariff threat.
I think the biggest danger to ASML might come from Chinese tech developers. And they could be, perhaps ironically, spurred on by the tariffs intended to protect against them. But ASML is the kind of tech stock I think investors should consider when stock markets are under today’s pressure.
Bigger yields
Going for knocked-down growth stocks isn’t the only way to try to benefit from a stock market slump. It can also be a really good time to consider making the most of enhanced dividend yields.
Look at Lloyds Banking Group. Towards the end of March its forecast dividend yield stood at around 4.7%. Then by early April a tariff-triggered share price fall pushed it to 5.7%. Nothing had changed at the bank.
That might not sound like a lot. But a £10,000 investment with an annual return of 5.7% could compound to £10,500 more after 20 years than at 4.7%.
The biggest risk I see to Lloyds right now is the car loan mis-selling case, with a verdict due in the summer. Looking at the Lloyds share price rebound makes me think the markets might not see much of a tariff threat after all.
There are many more top-dividend FTSE 100 stocks that I think we should consider buying on any big stock market falls.
