Australian shares are headed for a moderate drop ahead of today’s GDP figures, which may reveal that Australia’s economic growth has virtually ground to a halt.
By 7:15am (AEST), ASX futures were down 39 points, or 0.6 per cent.
The Australian dollar has rebounded to 67.61 US cents, after falling as low as 66.89 cents on the back of Tuesday’s disappointing retail sales data.
The latest figures from the Bureau of Statistics (ABS), out at 11:30am (AEST), are expected to show the domestic economy grew by 0.5 per cent in the June quarter, according to predictions from Reuters-polled economists.
This would take annual GDP growth to 1.4 per cent, its lowest level in a decade.
However, NAB’s forecast is even more bleak — 0.2 per cent quarterly growth. This would suggest Australia’s economy grew by 1.2 per cent, its weakest reading in almost two decades.
Delayed reaction to US-China tariffs
The local share market will follow a downbeat lead from Wall Street, as investors reacted negatively to last weekend’s escalation in the US-China trade war.
It was the first US trading session since Sunday, when China and the US followed through with their threats and imposed new taxes on each other’s imports.
The Dow Jones index lost 285 points, or 1.1 per cent, to 26,118.
The benchmark S&P 500 fell 0.7 per cent, and the tech-heavy Nasdaq dropped 1.1 per cent.
Investor sentiment soured even further after the latest figures showed that US manufacturing activity fell to a three-year low.
The Institute for Supply Management said its index of national factory activity dropped to 49.1, its lowest reading since early 2016. Any reading below 50 means signals a contraction.
The protracted US-China trade tensions weighed on business confidence, stoking fears of an upcoming recession.
“Sentiment was already poor to start the day and then the weaker-than-expected manufacturing data just added fuel to the fire,” said Dave Mazza, managing director of asset management firm Direxion.
“We now have confirmation that the escalation in the trade war has spilled over to US manufacturing just as it has to manufacturing around the globe.”
Spot gold has jumped 1 per cent to $US1,546.75 per ounce.
Brent crude oil has dropped 0.7 per cent to $US58.26 a barrel.
More to come