ASX 200 Hits Longest Losing Streak Since 2018: 3 Sectors to Buy and 2 to Avoid Right Now

After eight straight down days, here’s where smart money is positioning ahead of Tuesday’s RBA decision.

The ASX 200 just had its worst losing streak in nearly eight years. The market fell for eight days in a row before finally bouncing back on Friday. That kind of drop hasn’t happened since 2018, and it’s left many investors wondering one thing: is the worst over, or is there more pain ahead?

In our view, the bounce is a good sign, but it doesn’t mean the storm has passed. With the RBA likely to hike rates again on Tuesday and oil prices still jumping around because of the Iran war, this is a market where picking the right sectors matters more than ever. The good news is that selloffs like this one usually create real opportunities, as long as you know where to look. Here’s how we’d think about it.

What are the Best ASX Stocks to invest in right now?

Materials and Gold: Where the Smart Money is Already Moving

If you want to know where investors see real value, watch what bounced first. On Friday, mining giants like BHP, Rio Tinto, and Fortescue led the rebound, with rare earth and gold names close behind. We believe this matters. When a sector leads after a brutal selloff, it usually reflects real demand, not just bargain hunting.

The case is simple. Gold tends to do well when inflation is high, the Aussie dollar is weak, and global tensions are rising, all happening right now. The big miners also pay solid dividends, which softens the blow if the market gets choppy again. For investors wanting inflation protection, this is our highest-conviction call.

Energy: High Oil Prices Look Like They’re Sticking Around

The oil story is real, and it’s not over. Brent crude sits well above US$110 a barrel, up roughly 50% since the war in Iran began. With the Strait of Hormuz still effectively closed, supply pressure isn’t going away anytime soon.

Woodside, Santos, and Beach Energy are the obvious plays. Energy stocks also pay decent dividends, making them a useful hedge if global tensions get worse before they get better. The main risk: if a US–Iran ceasefire is reached, oil could fall fast. But for now, energy looks like one of the cleanest hedges out there.

Defence: A Long-Term Story, But Buckle Up

Governments around the world are spending more on defence than they have in decades, and Australian names like Austal, EOS, and DroneShield are winning real contracts. Austal is the steadier option thanks to a strong order book. DroneShield and EOS offer more upside but come with serious volatility. DroneShield recently dropped 22% in a single session. Treat this as a long-term theme and size your positions carefully.

Two Sectors We’d Step Back From

Consumer staples. Woolworths just plunged nearly 8%, even though sales were up. The problem? Costs are rising faster than supermarkets can pass them on. Until inflation cools, the margin squeeze isn’t going away.

Property and REITs. Higher rates make life harder for property trusts because they rely on borrowed money. With RBA hikes more likely, cheap-looking names could get cheaper before they recover.

The Bottom Line for Investors

We believe Friday’s bounce signals consolidation rather than a fresh leg lower, but expect more bumps. Tuesday’s RBA call is the next big test. Our take: lean into materials and energy, treat defence as a long-term play, and stay patient with rate-sensitive names. For long-term investors, this dip looks more like an opportunity than a warning, but only in the right places.