Australia's economy grew at its slowest pace in a decade last quarter, data showed on Wednesday, as tepid wage growth and a sharp downturn in home building weighed heavily on domestic consumption. GDP expanded 1.4% On a yearly basis, down from the downwardly revised 1.7% increase in the three months prior (originally +1.8%). Overall the economy grew by 0.5% in the three months to June.
Global market confidence was also dented after data on Tuesday showed that U.S. manufacturing activity contracted for the first time in three years in August, as Sino-U.S. trade tensions weighed on business confidence. U.S. President Donald Trump warned he would be tougher on Beijing if negotiations extended beyond the 2020 U.S. presidential election and he is re-elected.
The best performing sector was materials, up 0.2%, thanks to gains in gold miners. The most points were added by the gold miners and Wesfarmers, which gained 0.5% to close at a$38.54. Magellan Finance added 2% to close at a$51.60. The worst performing sector was healthcare, down 1.4%, followed by 0.9% falls in communications and utilities. Meanwhile CSL took away 1.5% to a$236.45. Medibank Private declined 4% to A$3.40.
Financial stocks, the biggest constituent of the benchmark by market capitalisation, lost about 1.1%. The Big Four banks slumped between 0.8% and 1.3%. Bendigo and Adelaide Bank and Bank of Queensland fell between 0.6% and 1.4%, after the country's corporate regulator sued the two regional banks over what it called unfair loan contracts for small businesses.
Building products supplier CSR was down 6.5% to A$3.71 after a note by JP Morgan suggested CSR's fortunes were closely tied to Australia's residential housing boom, which is now in decline. Contracting group CIMIC dropped 4.6% to A$29.37 despite announcing hundreds of millions in infrastructure contracts the day before.
ECONOMIC NEWS: Australia AiG Service Sector Expands In August -- Australia service sector moved into expansion territory in August with a Performance of Services Index score of 51.4, the latest survey from the Australian Industry Group showed on Wednesday. That's up sharply from 43.9 and it moves back above the boom-or-bust line of 50 that separates expansion from contraction. Individually, the indexes for employment, new orders, supplier deliveries, finished stocks, capacity utilization, input prices and average wages all expanded in August, while sales and selling prices remained in the red.
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Australia GDP Gains 0.5% On Quarter In Q2 --Australia gross domestic product gained a seasonally adjusted 0.5% on quarter in the second quarter of 2019, the Australian Bureau of Statistics said on Wednesday, unchanged from the previous three months following an upward revision from +0.4%. On a yearly basis, GDP expanded 1.4%, down from the downwardly revised 1.7% increase in the three months prior (originally +1.8%).
CURRENCY NEWS: The Australian dollar hovered near one-week highs against greenback on Wednesday, on hopes of an October rate cut after the country's second quarter economic growth matched expectations. The Australian dollar climbed to $0.6783.
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