Brace yourself for some panic selling. It's all about Greece this morning with our market expected to take a belting as Australia woke up to news that the European Central Bank (ECB) has frozen emergency funding to the indebted country.
The ECB's move comes in the wake of the country's decision to hold a referendum on creditors' conditions for extending more aid to Greece and will force Greek banks to stay shut on Monday as they've run out of cash.
It's going to be ugly as traders are pricing in a more than 1% crash in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) this morning and there will be few places to hide from the fallout.
Europe and US stock markets actually had a fairly benign session on Friday as the ECB didn't announce its intention until after the markets closed.
A bankrupt Greece could be forced to leave the European Union and no one knows how bad the fallout will be.
The global banking system could come under stress as the value of Greek government bonds and other assets held at European banks become next to worthless; while the existence of the European Union will come under question as Greece's exit could pave the way for other struggling member states to leave.
Mining giants like Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) are unlikely to be spared with the price of iron ore falling 0.3% to $US62.01 a tonne and crude oil easing 0.1% to $US59.63 a barrel.
While copper rose 0.6% to $US2.64 a pound on Friday night, I don't think that will do much to support OZ Minerals Limited (ASX: OZL) or Sandfire Resources NL (ASX: SFR), particularly since the latter got downgraded by Bell Potter to "hold" from "buy" with a price target of $5.95.
But Sandfire isn't the only one that has to contend with a downgrade. Property group Stockland Corporation Ltd (ASX: SGP) was cut to "neutral" from "overweight" by analysts at Commonwealth Bank of Australia (ASX: CBA), while fund manager Perpetual Limited (ASX: PPT) was lowered to "equal weight" from "overweight" by Morgan Stanley.
Qantas Airways Limited (ASX: QAN) is also under a cloud. The Asian joint venture between its subsidiary Jetstar and China Eastern could come apart after Hong Kong authorities refused the JV a license to operate. Hong Kong is a key part of Jetstar's Asian expansion and members of the JV are reviewing their options.
However, safe heaven assets could see some buying support. Gold extended Friday's gain to trade 1% higher this morning at $US1,184 an ounce and that could lift shares like Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Limited (ASX: NST).
Healthcare stocks could also find buying interest as their earnings are less correlated to economic shocks. But it's blood products maker CSL Limited (ASX: CSL) that is likely to be in the spotlight after the European Medicines Agency recommended its Voncento treatment for patients with bleeding disorder Von Willebrand disease (VWD).
At the smaller end of the sector, drugs and medical equipment manufacturer Medical Developments International Ltd (ASX: MVP) could also excite investors after the Australian Financial Review reports that it has struck a licensing deal with either Valeant or Mundipharma.
Shares in Medical Developments are in a trading halt and have gained close to 80% since January.
