IG Markets - Morning Prices & thoughts

US stocks fell again on Friday, closing down for the third straight week and posting the biggest monthly loss since February 2009. Weaker-than-expected results from technology giants Qualcomm & Motorola and surging Greek bond yields rattled investor confidence, despite a larger-than-expected US GDP reading of 5.7%.

The tech laden NASDAQ fell 1.5% on Friday while the broad based S&P 500 lost 1% and the Dow Jones Industrial Average weakened by 0.5%. For the month, the NASDAQ fell more than 5% while the Dow Jones and S&P 500 were down more than 3%.

The last two or three weeks has seen the market ignore positive fundamentals, especially earnings. The market was priced for perfection. As soon as cracks began to appear in the recovery story, the sellers appeared from everywhere.

IBT Sponsor: Test-drive 2 weeks only of the Top 10 Very Low Risk Stocks (ASX) 

Turning our attention to the local market and SPI futures are calling the ASX 200 to open 0.9% lower at 4527.

The theme of materials weakness is set to continue this morning despite a 1.3% and 1.5% gain in London for BHP Billiton and Rio Tinto. A 1.6% fall in the S&P materials sector coupled with mostly bearish leads from the base metals will likely see our materials stocks drag yet again.

Energy stocks are set to underperform again as Crude Oil futures lost 1.5% to be trading around $72.64. The energy sector was the worst performer among US sectors too.

The financials will likely come under pressure after a 0.7% fall in the S&P Financial sector.

On the upside, we may see some relative outperformance from the defensive healthcare and consumer staples sectors. However, it's highly unlikely it will be enough to offset the selling elsewhere.

In economic news, the ANZ job ads survey and the Home Price Index are due at 11.30 today. However, most of the attention will be on tomorrow's RBA interest rate decision. The market is factoring in a 60% chance of a 25 basis point hike. However, given recent volatility in equity markets and economic data, we feel the decision will be line ball. Don't be too surprised if they hold rates.