Our market is poised to fall for a third day as falls on Wall Street on disappointing earnings and a further slide in commodity prices weigh on sentiment.
The futures market is pointing to a 0.4% drop in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) this morning and we can all blame resource stocks for doing most of the damage.
Energy company Santos Ltd (ASX: STO) may soon retest April’s 11-year low of $6.93 as the West Texas Intermediate (WTI) oil price slide 0.9% to $US48.82 a barrel on oversupply fears. Santos closed 1.9% down at $7.11 on Thursday.
The price of iron ore slipped for its third day although iron ore miners can at least breathe a sigh of relief that the price of the steel making commodity only dipped 0.1% to $US51.72 a tonne. Sounds crazy, but I suspect Fortescue Metals Group Limited (ASX: FMG) may even enjoy a relief rally after the stock crashed 6% to an eight-year low of $1.64 yesterday.
The miner said it is in no hurry to sell a stake in its mines to raise cash as it has some wriggle room before its next debt repayment and at least two brokers have upgraded the stock following its quarterly result announcement yesterday.
But it’s not all bad news for resources. Iron ore and steel producer Arrium Ltd (ASX: ARI) is attracting more corporate interest with The Australian reporting that private equity groups Kohlberg Kravis Roberts and Carlyle Group are entering the ring to bid for Arrium’s Moly-Cop grinding media business.
Takeover speculation surrounding South32 Ltd (ASX: S32) will come back into the fore on news that the diversified miner hired Morgan Stanley and Macquarie Group Ltd (ASX: MQG) to defend it against a takeover approach.
However, there might be trouble brewing at copper miner CuDeco Limited (ASX: CDU) as Bloomberg reports that its major Chinese shareholders are trying to oust the chairman Wayne McCrae.
In other news, electronic auto parts and services company Infomedia Limited (ASX: IFM) is likely to come under pressure as its issued a profit warning due to volatile exchange rates and higher-than-expected costs.
Queensland-based transport company Lindsay Australia Limited (ASX: LAU) will also be in the spotlight as it agreed to buy S&J Pennisi. While no price was given, management said the deal will generate returns in excess of 15% annually by year 3.
Biotech company Acrux Limited (ASX: ACR) has announced its June quarter sales result for Axiron. Acrux has received royalties from Eli Lilly of $US19.2 million for 2014-15 compared with $22.3 million in the previous year.
Finally, fashion brand OrotonGroup Limited (ASX: ORL) has agreed to sell its stake in the loss-making Brooks Brothers brand to its US parent company so OrotonGroup can better focus on its core brand.
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Motley Fool contributor Brendon Lau owns shares of South32 Ltd. Follow me on Twitter - https://twitter.com/brenlau
The Motley Fool Australia owns shares of Infomedia. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.