• Local shares closed lower despite stronger than expected GDP
  • Energy led the ASX following a rally in oil prices
  • Orora out of trading halt and down -17%

 

The ASX slipped further after lunch despite a better-than-expected GDP report. At the close of day, the benchmark ASX 200 index was down about -0.7%.

According to the ABS, Australia’s GDP grew by +0.4% in the three months to June, beating forecasts of +0.3%.

During the quarter, the rise in both international students and tourism has helped offset sluggishness in household consumption.

Part of the GDP growth can also be credited to the public sector as government spending contributed to the overall headline figure.

“Many analysts feared for the worst due to the impact of fluctuating interest rates and the ongoing challenges posed by a sluggish post-Covid recovery in China,” said Farhan Badami, market analyst at eToro.

Badami says that despite the somewhat modest GDP figures, the overall outcome remains positive.

“However, there are potential challenges on the horizon, particularly if there is a decline in public demand, which could potentially undo the progress achieved in this quarter.”

 

What happened in markets

On the ASX, Energy was the only sector in the green today as investors reacted to oil prices surging to over US$90 a barrel overnight.

It came as Saudi announced that it will prolong its 1 million b/d production cut to December, and Russia by 0.3m b/d.

“There is no sign that Saudi Arabia will shift away from its current price-over-volume strategy,” Bjarne Schieldrop, chief commodities analyst at SEB AB told Bloomberg.

Oil stocks Woodside (ASX:WDS) and Santos (ASX:STO) rallied and led the sector.

Elsewhere, the AUD is now trading at US63.86c as the US dollar climbed to its highest level since March against a basket of major currencies including the AUD.

“Worries are on the rise about a China and Europe-led slowdown in global growth. As a result the dollar is catching a solid safe haven bid,” said Joe Manimbo, senior market analyst at Convera.

 

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Qantas (ASX:QAN) lifted 1.3% today as Morgan Stanley retained its $9 price target on the airline (vs $5.72 at time of writing) after CEO AlanJoyce said he would bring forward his retirement by two months to help the company “accelerate its renewal”.

 

BIG CAP LOSERS

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Packaging solutions company Orora (ASX:ORA) dropped 17% after re-emerging from a voluntary suspension.
The company announced today an equity cap raise of around $1.345 billion – comprising a $450m institutional placement and a $895 million 1-for-2.55 accelerated pro rata entitlement offer.

Funds will be used to acquire 100% of France-based Saverglass SAS, a global leader in high-end bottles for the premium and ultra-premium spirit and wine markets, for an enterprise value of €1.29 billion.

Sayona Mining (ASX:SYA) said it has received cash for its North American Lithium operation in Québec following the inaugural shipment of 20,500 wmt (wet metric tonnes) of spodumene (lithium) concentrate to the international lithium market.

Approximately 30,000 wmt of concentrate inventory at port is now available for upcoming shipments. Meanwhile, loading of the first shipment to offtake partner Piedmont Lithium is slated for later this month.

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