Things will turn nasty for our market this morning as US and European stocks suffered a big sell-off and commodities plunged on fresh worries about China.
The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is expected to slump 1.3% at the open and we can be thankful that we do not have any listed automakers as that sector is deeply out of favour following revelations that Volkswagen cheated on emissions testing, which exposes the group to billions in fines and damages.
The scandal and news that the Asian Development Bank had downgraded China's growth rate contributed to the 3% plus drop in European shares as US stock indices shed more than 1%.
Commodity stocks were also hit hard with copper slumping 3.4% to $US2.3080 a pound as iron ore suffered its worst fall in a month of 1.9% to $US56.21 a tonne.
This probably means resource stocks will be leading the market lower with the US-listed stocks of BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) tumbling 3.8% and 3.6%, respectively, in overnight trade.
Diversified miner South32 Ltd (ASX: S32) will have another headache to deal with today. The US Department of Commerce has issued a preliminary anti-dumping determination against Tasmanian-based manganese producer TEMCO, which is 60% owned by South32.
TEMCO intends to defend its position and South32's other manganese operations in Australia and South Africa are not affected.
There's little joy for energy stocks like Santos Ltd (ASX: STO) as the West Texas Intermediate oil price fell 1.8% to $US45.83 a barrel and not even gold will provide much of a safe haven as the higher US dollar pushed down the precious metal by 0.8% to $US1123.90 a pound. It looks like investors feel more secure in this environment to hold on to the greenback instead of the shiny yellow metal.
There's plenty going on outside of resources too. All eyes will be on crop protection chemical supplier Nufarm Limited (ASX: NUF) as it is forecasting a "solid" 2015-16 performance as it handed down its full year results this morning.
Management reported a 15% increase in net profit to $43.2 million as sales improved 4% to $2.7 billion in the last financial year, although the news could be overshadowed by the death of a worker at its plant in Austria.
Meanwhile, a bidding war has erupted for Australian Industrial Reit (ASX: ANI) with 360 Capital Industrial Fund (ASX: TIX) upping its offer to $2.47 a share for the property group after an unnamed offshore consortium emerged with a $2.40 cash offer for the target.
Another takeover target to be in the spotlight today is engineering consultancy Cardno Limited (ASX: CDD), which will hold its annual general meeting today. The company recently rejected a proportional takeover offer from private equity group Crescent Capital and shareholders will be keen on hearing an update from management.
Finally, global logistics group Brambles Limited (ASX: BXB) could buck the market downtrend. The stock, which benefits from a stronger US dollar, has been upgraded to "outperform" from "sector perform" by RBC Capital after it shed more than 16% of its value in six months.
