ASX Large Caps: Blue chips down 1pc as China’s weak GDP puts a damper on iron ore majors

• ASX was down 0.80% today, -1.20% for the week
• China GDP comes in much weaker than expected
• Iron ore stocks dumped

Local shares closed the week on a downer, falling by 0.80%. For the full week, the ASX 200 was down by 1.20%.

Mining stocks were dumped following the 8% tumble in iron ore price overnight and China’s weak second-quarter GDP released today.

According to the release, China’s economic growth in Q2 fell sharply by 2.6% from the last quarter. The consensus was for a 1.5% drop, a relatively big miss.

The official explanation from the Chinese government was that GDP fell largely due to lockdowns over Covid-19 which hit industrial activities as well as consumer spending.

The second biggest economy in the world also suffered a huge setback in its property sector, with fresh data today showing that homebuyers are boycotting mortgage repayments.

Chinese property stocks and Australian iron ore stocks fell heavily on the news, with BHP (ASX:BHP) and Fortescue (ASX:FMG) falling by 4-5%.

Rio Tinto (ASX:RIO) also fell 2% after warning that it was facing worker shortages in its WA mines because of rising Covid-19 cases. The company also said the costs of exporting its iron ore from WA has increased by 5% this year, affecting margins in the second quarter.

Covid-19 is indeed spreading rapidly in the country. Nationally, we recorded 65 deaths and over 43,000 new COVID-19 infections today, with authorities warning the new Omicron variants to be highly infectious which will put pressure on the public health system.

On the ASX today, Staples and Healthcare led, up by less than 1%.

Looking ahead to next week, we can look forward to the Euro CPI data on Wednesday, and a monetary policy decision from the Bank of Japan on Thursday.

BIG CAP WINNERS

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Global logistics tech company Wisetech Global (ASX:WTC) jumped by as much as 7% today after reporting that its FY22 revenue is expected to be at the top end of the $600m–$635m guided range.  The expected FY22 EBITDA range has also increased to $310m–$320m, from $275m–$295m.

BIG CAP LOSERS

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Investment manager Pendal (ASX:PDL) fell 7% after it reported worse than expected outflows in the June quarter.

Pendal’s assets under management (AUM) for the quarter fell to $111 billion as investors pulled out $4.2 billion during the period.