Investors should turn off their trading screens today. Our market is expected to take a beating as US and European equity markets plunged deep into the red on worries about Swiss mining giant Glencore and scandal-plagued car maker Volkswagen.
The futures market is pointing to a bruising 1.8% drop for the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) as most major Western share markets shed more than 2% and as Glencore plunged 29% on fears that it won't be able to survive the commodities rout.
Looking at the credit default swap (CDS) for Glencore, which is an insurance bond investors can buy to protect against a default, the market believes there is a 54% chance that Glencore will not be able to service its huge debt burden, according to Bloomberg.
Adding to the gloom in the sector, the commodity prices also tumbled as investors dumped risk assets for safe havens like the US dollar and Japanese yen.
Expect a bloodbath in the resources sector. Our mining heavyweights like BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) will likely fall in sympathy with Glencore and the 2.3% drop in the copper price to $US2.2320 a pound, although investors can take some heart that iron ore only dipped 0.2% to $US56.86.
The US-listed shares of both miners crashed more than 4% last night.
Energy stocks like Woodside Petroleum Limited (ASX: WPL) will also be weighed down by the 2.8% fall in the West Texas Intermediate oil price to $US44.34 a barrel, but the lower Woodside's share price falls, the greater the pressure for the company to undertake a share buyback instead of the acquisition of Oil Search Limited (ASX: OSH).
Bauxite mining and alumina refining company Alumina Limited (ASX: AWC) will be in focus too as investors try to work out how it might be impacted by Alcoa's plan to split itself into two companies in the face of the commodity slump.
Alcoa is the largest US aluminum producer and is a joint-venture partner with the ASX-listed company.
Another stock in the corporate action spotlight is scrap metal recycler Sims Metal Management Ltd (ASX: SGM). Deutsche Bank suggested that it would "make sense" for Sims Metal to acquire US-based steel manufacturer Schnitzer Steel Industries.
The NASDAQ listed Schnitzer Steel surged 5.3% on Monday night suggesting that the market believes in the rationale for the deal.
Outside of resources, adventure gear retailer Kathmandu Holdings Ltd (ASX: KMD) will come into frame as it is expected to hand in its full year results.
There's a lot riding on this result as Kathmandu rejected a takeover offer from Briscoe Group early this month and is urging investors to put their faith in management's turnaround strategy for the embattled retailer.
Shares in telecommunications services group M2 Group Ltd (ASX: MTU) could come under pressure after Morgans downgraded the stock to "hold" from "add" in the wake of its merger plans with Vocus Communications Limited (ASX: VOC) that triggered a 13.4% surge in M2's share price to $9.55 yesterday.
Meanwhile, our national carrier Qantas Airways Limited (ASX: QAN) will be in focus after its joint venture Jetstar Japan posted its fourth consecutive annual loss but said that it will become profitable in the current financial year.
Finally, today is the last day you can buy Auckland International Airport Ltd (ASX: AIA), property developer Cedar Woods Properties Limited (ASX: CWP) and fertility treatment company Virtus Health Ltd (ASX: VRT) for their dividend as they trade ex-div tomorrow.
Auckland International will pay an unfranked 8.78 cents a share dividend, while Cedar Woods and Virtus will hand out a fully franked payout of 16 cents and 14 cents a share, respectively.
