Despite gains on Wall Street overnight, the ASX is set open flat this morning ahead of the release of GDP figures at 11:30 am. The ASX SPI Futures are down 0.05% to 7,751.
GDP is tipped to have grown just 0.1% in the March quarter, bringing annual growth to 1.1% for the weakest performance since 1992, excluding the deceleration during the COVID-19 pandemic.
This is down from the 1.2% rise in GDP in the December quarter and annual growth at 1.4%.
Australia’s economy has been slowing to a crawl as households cut spending. On a per capita basis, we’re already in a recession, as population growth outstrips the GDP data in real terms.
Treasurer Jim Chalmers pushed back against calls for Labor to make deeper spending cuts and tame inflation, saying “Some of the most hawkish commentary we see completely misses the fact that the economy is already soft and people are already under pressure.
“In these circumstances, it would have been crazy to tighten the screws even further on a soft economy, and on people who are already doing it tough.”
What happened overnight?
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US markets
US sharemarkets rose in choppy trading on Tuesday following softer-than-expected US labour market data that reaffirmed investor expectations of an interest rate cut by the US Federal Reserve.
Data showed that US job vacancies fell to their lowest level in over three years in April, signalling an easing in labour market tightness that supported a Fed rate cut this year. US Treasury yields slipped following the report.
Carnival (NYSE:CCL) shares popped 5.8% after the cruise company announced it will fold P&O Cruises Australia into Carnival Cruise Line as it attempts to boost capacity for its flagship brand. Norwegian Cruise Line and Royal Caribbean Cruises rose between 2.8% and 4%.
Honeywell (NASDAQ:HON) rose 2.4% on a broker upgrade from Jefferies after it raised its full-year sales and earnings guidance.
Personal care and home fragrance retailer Bath & Body Works slid 12.8% on the back of disappointing guidance.
- The Dow Jones index rose 140 points or 0.4%;
- The S&P 500 index gained 0.2%; and
- The Nasdaq index added 28 points or 0.2%.
European markets
European sharemarkets slipped on Tuesday, snapping a three-day winning streak. A risk-off mood also set in as market participants awaited the European Central Bank's rate verdict on Thursday, where it is expected to ease borrowing costs by 25 basis points.
Energy stocks led losses with a 2.6% drop, hitting an over a two-month low, tracking a more than 1% fall in oil prices. British oil giant BP (LON:BP) fell 3.8% after ratings agency S&P Global revised the company's credit outlook lower.
Basic Resources, which houses Europe's biggest mining firms, dipped 2.3% amid declining prices of metals like gold and copper.
- The continent-wide FTSEurofirst 300 index slid 0.5%.
- In London, the UK FTSE 100 index lost 0.4%.
Currencies
Currencies were mixed against the US dollar in European and US trade.
- The Euro fell from US$1.0902 to US$1.0859 and was near US$1.0875 at the US close.
- The Aussie dollar dipped from US66.67 cents to US66.31 cents and was near US66.45 at the US close.
- The Japanese yen firmed from 156.10 yen per US dollar to JPY154.53 and was near JPY154.80 at the US close.
Commodities
Global oil prices fell to the lowest in four months on Tuesday on scepticism about an OPEC+ decision at the weekend to boost supply later this year into a global market where demand has already shown signs of weakness.
- The Brent crude price slid US84 cents or 1.1% to US$77.52 a barrel.
- The US Nymex crude price shed US97 cents or 1.3% to US$73.25 a barrel.
Base metal prices slipped on Tuesday due to lacklustre demand in top consumer China.
- Copper futures fell 2.8%
- Aluminium futures inched 0.1% lower.
The gold futures price fell US$21.90 or 0.9% to US$2,347.40 an ounce on Tuesday as the US dollar steadied. Spot gold was trading near US$2,326 an ounce at the US close.
Iron ore futures slid US$2.41 or 2.2% to US$107.69 a tonne, the lowest level in nearly seven weeks as high portside inventories and weak demand in China weighed on sentiment.
What’s on?
In Australia, economic growth (GDP) data is scheduled with the Judo Bank services purchasing managers' index (PMI) and motor vehicle sales figures. RBA Governor Michele Bullock appears before the Senate.
On the small cap front
The S&P ASX Small Ordinaries ended 0.32% higher yesterday, while the ASX200 lost 0.15%.
You can read more about the following throughout the day.