The Australian share market hit a record high of 8,500 points on Wednesday amid a broad market sell-off, but has since fallen.
ASX 200 snaps three-day winning streak: NewsWire / Max Mason-Hubers
The ASX 2000 index snapped a three-day winning streak and retreated from record highs as markets absorbed key economic data.
Australia’s S&P/ASX 200 index closed down 32.6 points, or 0.4%, at 8462.6 points, paring its intraday losses by 0.8% as weak GDP data made the RBA’s May-April rate cut expectations a foregone conclusion. The broader All Ordinaries index also fell 0.30% to 8728.50 points.
ASX 200 snaps three-day winning streak: NewsWire / Max Mason-Hubers
Eight of the 11 sectors fell, with real estate, financials, utilities, communications and staples underperforming the index, while only materials, technology and energy rose.
Goodman was the biggest drag on the index, followed by the big four banks, led by Westpac, which fell between 0.5% and 1.6%. Lithium miners Pilbara and MinRes both fell more than 4.
Gold miners Evolution and Newcrest rose 2.5% to 2.7%, while iron ore miners BHP, Rio Tinto and Fortescue rose 0.9% to 1.4.
Ms Amir said the market was looking at strong prospects for resources, particularly the iron ore and gold sectors.
“Iron ore prices have risen 9% in three weeks and the market expects further gains, driven by a stronger Chinese economy,” she said.
She also said gold prices were higher due to the changing geopolitical backdrop, including new threats from Donald Trump and the declaration of martial law by South Korea’s president.
In Australia, the Australian Bureau of Statistics released GDP data showing that the economy grew by 0.3%, mainly due to government infrastructure projects and energy rebates.
The economy grew by 0.8% in the 12 months to September 2024. This is the slowest growth rate since the 1990s recession (excluding the drop in economic spending caused by the coronavirus pandemic.
Share prices on the Australian Stock Exchange were broadly lower, with most sectors in the red: NewsWire/Max Mason-Hubers
Ms Amir said the GDP data showed the Australian consumer was actually in recession and currency markets would be affected by future rate cuts.
“We need the RBA to cut rates. For the first time ever, the market is now seriously expecting a rate cut,” she said.
“The market is pricing in a 70-70 chance of a rate cut in May.”
The Australian dollar has fallen as interest rates continue to fall and is currently trading around 64.66 US cents.
Westpac said the national accounts showed the “fundamentals” of the Australian economy were weaker than the “weak” 0.3% quarterly GDP growth rate, as government spending drove all of the growth while private demand and business investment were flat.
“The main point of the September update is that the expected tentative recovery in private demand has yet to take shape,” said Paul Bustamante, senior economist at Westpac.