ASX closes strong despite latest GDP data being lower than forecast

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The Australian stock market rose despite slower-than-expected GDP data released on Wednesday.

The S&P/ASX200 rose 0.41 percent, or 31.9 points, to 7,769 at the close on Wednesday, above its 50-day moving average, while the broader All Ordinaries rose 0.35 percent to 8,022.2.

Eight of eleven industrial sectors closed in positive territory, while mining and energy stocks slipped into the red due to weaker commodity prices.

Sandfire Resources and Liontown Resources recorded the largest losses, at 6.1 percent and 5.8 percent respectively.

Meanwhile, Xero also fell 4.8 percent after a block trade was announced on Wednesday.

The best performing stocks at the close were Treasury Wine Estates Ltd and Seek Ltd, up 5.27 percent and 5.25 percent respectively.

The Australian dollar remains stable against the greenback, trading at 65.56 US cents at 4:30 p.m.

This is because Australia’s gross domestic product grew by just 0.1 percent in the March quarter, compared to the forecast of 0.2 percent.

The Australian Bureau of Statistics said on Wednesday that the latest data showed annual growth falling to 1.1 percent from 1.5 percent in December.

Charu Chanana, head of foreign exchange strategy at Saxo, said the latest Australian GDP data suggested there would continue to be strong moves in the equity market.

“The Australian dollar’s muted reaction to Australia’s first quarter GDP target miss is a sign that markets are not worried about the risk of a premature rate cut by the RBA,” Ms Chanana said.

“The Australian dollar is likely to remain supported by gains in the commodities sector and the recovery in China.”

Devika Shivadekar, economist at RSM Australia, said annual GDP growth to March showed the economy had weakened faster than the RBA expected, leaving many concerned about whether the economy could absorb another rate hike.

“The household saving rate has declined again after a recovery in the December quarter of 2023, mainly due to significantly more modest employee compensation and capital gains in the March quarter,” Ms Shivadekar said.

“The biggest drag on the economy is consumers, who are essentially in hibernation until the outlook brightens.

“As we have previously noted, the RBA will decide to maintain its stance at the June meeting and is unlikely to change its stance until it has insight into two further quarterly CPI data sets.

“This makes the November meeting the one to watch.”

Meanwhile, the Dow on Wall Street rose 0.4 percent, while the Nasdaq also performed well, gaining 0.2 percent by the close.

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