Global markets have been weighed down by weak Chinese data and our market looks set to post its third day of declines.
The futures market is pointing to a 0.5% drop for the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) in early trade and the selling will be fairly broad based with banks and the major miners likely to come under pressure.
Westpac Banking Corp (ASX: WBC) will take centre stage after it announced a $3.5 billion entitlement offer at around a 16% discount to its last closing price and the news will likely weigh on its share price when it emerges from its trading halt.
Its peers will also feel the impact as some shareholders sell part of their holdings in other bank stocks for cash to participate in the heavily discounted new share offer.
But Westpac has softened the blow by reporting a better-than-expected full year cash profit of $7.8 billion, although its dividend fell slightly short of what the market was hoping for. We will bring you more detail and analysis on Westpac later today.
Coincidentally, reports that the Australian Securities and Investments Commission is investigating wealth management advice at the biggest financial institutions following reports of unethical behavior will also put the other banks like Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking Group (ASX: ANZ) under an uncomfortable spotlight.
You won't find much relief in the resources space either after the price of most commodities fell on the back of yesterday's weaker-than-expected Chinese import data. The 1% drop in the West Texas Intermediate oil price to $US46.63 a barrel is likely to extend losses in Woodside Petroleum Limited (ASX: WPL) and Santos Ltd (ASX: STO).
The major miners like Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) won't fare much better as the iron ore price tumbled 2.9% to $US54.97 a tonne and copper shed 1.4% to $US2.3815 a pound.
However, the merger and acquisition spotlight will be focused on Rio Tinto and BHP today. Rio Tinto told the Wall Street Journal that it isn't interested in buying any of Glencore's assets as the Swiss commodity trader looks to sell assets to bolster its debt-laden balance sheet.
The irony won't be lost on investors as Glencore tried to acquire Rio Tinto late last year. Now the predator is more like a wounded prey.
Glencore isn't the only distressed seller of assets and BHP Billiton is keen to capitalise on the situation by making opportunistic acquisitions, according to the Australian Financial Review. Rio Tinto may be more conservative on this front but I bet it won't say "no" if the right deal came along.
Meanwhile, National Australia Bank Ltd. (ASX: NAB) may be selling its insurance business to Nippon Life in a deal that could be worth as much as 300 billion yen ($3.47 billion), reported Japanese news agency Kyodo; while wine maker Treasury Wine Estates Ltd (ASX: TWE) is expected to announce that it is buying Diageo's wine business today, according to Sky.
