The ASX is likely to experience another day of falls. ASX 200 futures are trading 18 points lower, down -0.25% as of 8:20 am AEST.
Issues in China are weighing markets down, with Wall St also in the red yesterday.
China released fresh data on Tuesday that pointed to a slowdown in services activity amid global growth concerns.
Beijing has implemented further stimulus measures in recent days, notably supporting the country’s ailing property sector and the creation of a government body to help the private sector.
Figures released later today, relating to the state of the Australian economy at the end of June may have further impact locally.
GDP is likely to show slowing growth.
NAB expects GDP of 0.5% quarter-over-quarter and 1.9% year-over-year.
NAB stated, “Public final demand rose 1.8% q/q and is set to contribute 0.5ppt to quarterly growth. That on the back of an 8.2% q/q lift in public investment, supported by state and local government and defence spending. Public sector inventories also accumulated more quickly than in the previous quarter, a further support to GDP growth.”
St George Bank said: “Our central forecast is that the economy grew by 0.4% over the June quarter to be 1.8% higher in annual terms.”
UBS is forecasting “a rise of 0.3% q/q, albeit we still see downside risk from the weakness in partial data on income and profits. The y/y is expected to edge up to 1.8%”.
What happened yesterday
Here’s what we saw (source Commsec)
US markets
Tumbled on Tuesday, pressured by rising bond yields and oil prices as investors assessed prospects for the US Federal Reserve's interest rate path. The S&P 500 energy sector was a bright spot, up 0.5%, hitting a seven-month high, after Saudi Arabia and Russia announced an extension to their voluntary supply cuts.
Tesla (NASDAQ:TSLA) led gains in megacaps, up 4.7%. Shares of Airbnb (NASDAQ:ABNB) rose 7.2% and Blackstone (NYSE:BX) added 3.6%, after an announcement that their stocks would join the S&P 500 index. United Airlines shares fell 2.5% after a temporary grounding of its aircraft.
Shares of Pultegroup (-5.7%) and Lennar (NYSE:NYSE:LEN) (-4.9%) both fell as investors took profits on strongly performing homebuilder stocks. Illumina (NASDAQ:ILMN) shares slid 5.4% after Agilent Technologies (NYSE:NYSE:A)' Jacob Thaysen was appointed the DNA-sequencing giant's next CEO.
- The Dow Jones index fell by 196 points or 0.6%.
- The S&P 500 index dipped 0.4%.
- The Nasdaq index shed 11 points or 0.1%.
Ended lower on Tuesday as weak services sector data from China and the eurozone fuelled concerns about slowing global growth. HCOB's final eurozone services Purchasing Managers' Index (PMI) sank to 47.9 in August from 50.9 in July, below the flash 48.3 estimate (survey: 48.3).
China-exposed sectors such as luxury and construction & materials were among the top drags, falling 1.2% and 1.0%, respectively, as data showed China's services activity expanded at the slowest pace in eight months in August.
Eurozone consumer inflation expectations for three years from now nudged higher, the latest survey from the European Central Bank (ECB) found, from 2.3% in June to 2.4% in July (survey: 2.3%).
The continent-wide FTSEurofirst 300 and UK FTSE 100 indexes both fell by 0.2%.
Currencies
Were weaker against the US dollar in European and US trade.
- The Euro fell from US$1.0784 to US$1.0705 and was near US$1.0720 at the US close.
- The Aussie dollar slid from US64.01 cents to US63.57 cents and was near US63.75 cents at the US close.
- The Japanese yen fell from 146.81 yen per US dollar to JPY147.78 and was near JPY147.70 at the US close
Global oil prices rose to their highest since November on Tuesday after Saudi Arabia and Russia extended their voluntary supply cuts to the end of the year, worrying investors about potential shortages during peak winter demand.
- The Brent crude price rose by US$1.04 or 1.2% to US$90.04 a barrel.
- The US Nymex crude price gained US$1.14 or 1.3% to US$86.69 a barrel.
- The copper futures price was little changed and the aluminium futures price fell by 1.6%.
- The gold futures price fell by US$14.50 or 0.7% to US$1,952.60 an ounce.
- Spot gold was trading near US$1,925 an ounce at the US close.
- Iron ore futures shed US$1.06 or 0.9% to US$117.13 a tonne as traders assessed measures by China to support its flagging property market.
Goldman Sachs (NYSE:NYSE:GS) has cut its estimated 12-month US recession probability further to 15% from 20%, citing “continued positive inflation and labour market news”.
“Our estimate is far below the Bloomberg consensus, which remains stuck at 60%. We are also substantially more optimistic than most other forecasters in terms of our baseline GDP growth forecast, which averages 2% through the end of 2024.”
Goldman Sachs’ economist Jan Hatzius said the strength in third-quarter GDP tracking “likely overstates the economy’s true momentum”.
Goldman expects a deceleration in the final three months of 2023, which will be led by a resumption of student loan payments and a near-term hit to housing from the recent increase in mortgage rates.
“But we expect the slowdown to be shallow and short-lived. First, real disposable income looks set to re-accelerate in 2024 on the back of continued solid job growth and rising real wages.
“Second, we still strongly disagree with the notion that a growing drag from the ‘long and variable lags’ of monetary policy will push the economy toward recession—in fact, we think that the drag from monetary policy tightening will continue to diminish before vanishing entirely by early 2024.”
Hatzius was encouraged by underlying inflation.
“Underlying inflation may already be near the Fed’s target, despite the ups and downs of commodity prices, traditional ex food and energy inflation, and the core services ex housing CPI or PCE measures (which by construction assign larger weights to these poorly measured components and are therefore even more distorted).”
Qantas to reset
New Qantas chief executive Vanessa Hudson has the opportunity to "reset the relationship with Australians", according to Home Affairs Minister Clare O'Neil.
O’Neill passed the buck on the Qatar decision saying defending Transport Minister Catherine King's decision to block additional Qatar flights. O’Neill told Sunrise, "She is entitled under Australian law to make these decisions in the national interest.
"But I think what is really going on here is Australians are really fed up with a bunch of things that are being happening in aviation in particular, [and] also the behaviour of Qantas.
"A new CEO [is] taking the helm of Qantas today and they have a big opportunity had to reset the relationship with Australians and I just hope they take it."
Hudson admitted challenging times ahead but said she would put the customer first.
“We know that post-COVID we haven’t always delivered to our customers' expectations but we are listening and we hear what they are saying,” she said.
“As a company, it’s our job to get the balance right between looking after our customers, you our people and the business itself. Right now, achieving this balance must first start with the customers and that’s what we will be focused on with our new management team.”
Hudson also seems to have better relationships with staff.
“I want to be very approachable,” she said.
“I want to be very visible in the organisation and I want to be a leader who empowers not just those in my leadership team but the whole organisation to be the best they can be in the jobs they do.”
The small cap market
The S&P/ASX Small Ordinaries mirrored the broader market yesterday, down 0.68%.
It has been a slow moving news morning, however you can read about the following and more throughout the day.