ASX poised to open lower on weaker than expected GDP growth

Stock Markets

Australian shares are poised to open marginally lower today on weaker than expected December GDP figures released by the ABS on Wednesday. The GDP figures indicate a sharp slowdown in economic growth as the GDP had grown by 0.2% in the December quarter and by just 2.3% for the year, falling short of forecasts for 0.5% growth during the quarter. On Wednesday, RBA governor Philip Lowe reassured investors by implying that the RBA will not be hiking interest rates this year and hinted future rate cuts.

Wall Street's main indexes closed lower overnight as US/China trade optimism fades due to a lack of any further developments. The Dow Jones, S&P 500 and the NASDAQ 100 closed in negative territory overnight, with the indexes losing 133.17 (-0.52%), 18.20 (-0.65%) and 70.44 (-0.93%) points respectively.

The benchmark S&P/ASX200 index closed up 46.3 (+0.75%) points on Wednesday as investors hoped that weaker than expected economic figures would put pressure on the RBA to cut interest rates this year. All major GICS sectors were up yesterday, with the materials sector (+1.11%) seeing the highest percentage gains.

ASX 200 futures are currently up 2.0 points. 

Today's data releases: AiG performance of construction February, Trade January, Retail sales January, Euro zone fourth quarter GDP, ECB policy meeting, US consumer credit January

Commodities and Currencies

Oil prices saw little change on Wednesday as a drop in weekly US fuel stockpiles offset a surge in crude inventories. Brent crude was marginally up overnight at US$65.91 (+0.08%), while WTI crude closed lower at US$56.19 (-0.65%).

Iron ore prices are flat at US$87.05 per tonne.

The spot price of gold was marginally down 0.02% at US$1286.16.

The AUD is currently marginally down 0.01% at US70.31¢. The Australian dollar fell to a three-month low yesterday as a sharp deceleration in GDP growth sent global investors positioning themselves in-line with revised expectations for Australian interest rates.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633.