Cameron Peacock, Research Analyst, IG Markets

Overnight, US stocks began the new quarter as they ended the previous one – getting hammered on concerns over Greece’s downwardly spirally budgetary position and the prospects of a broadening global slowdown.  All three major indices closed at their lowest levels in more than a year and posted their worst start to October since 1998.  The issues in Europe overshadowed some better-than-expected US economic data that saw manufacturing expand at a slightly faster pace than expected in September, and an unexpected gain in construction spending.
Among the major averages the Dow Jones Industrial Average fell 2.4% to end at 10655, the S&P shed 2.9% to 1099, while the NASDAQ slumped 3.3% to 2335.   All S&P sectors were significantly lower led by the financial and energy sectors.
The catalyst for the heavy falls overnight was the unsurprising news that Greece was likely to miss its deficit targets for both 2011 and 2012 and would be forced to seek further bailout funds.  The situation is becoming a bit like a bottomless pit and is seeing market pessimism reaching a fever pitch, fuelled by an increasing belief that global policymakers are both powerless and inept when it comes to getting a handle on the situation.
Turning to the local market and unfortunately it is looking like another bleak day.  After posting a 2.8% fall yesterday the ASX 200 is currently set to unwind approximately 80 points or 2.1% lower at 3816 on broad based selling.  Major sector drivers of our market such as the industrial, financial, energy and materials sectors all shed more than 3% in US trade and are likely to be hard hit on the local bourse.  Market leader BHP’s ADR is suggesting BHP will open more than 1% lower at $33.78, despite most of the base metals experiencing a degree of stability overnight.
Today is also RBA decision day.  While highly anticipated the outcome should be a bit of a non event.  Despite some corners of the market calling for an emergency rate cut to restore confidence and boost the idling economy, most economists are predicting the RBA Board to leave rates unchanged at 4.75%