The Wrap: Sluggish China GDP weighs on the ASX

The lowdown: The ASX 200 recovered from a nine-day low in early trade, but it was not enough to avoid snapping a three-day streak of gains.

Miners dragged the market down as iron ore slipped due to fears of slow demand in China, which reported a sluggish GDP growth of 0.4 per cent on Friday. Iron ore futures were down 4.8 per cent to $US104.96.

In its second quarter production report Rio Tinto said higher inflation had sliced $400 million off their pre-tax underlying earnings for the first half of 2022.

“Trade disruptions, food protectionism and the global focus on securing energy supplies continue to put pressure on supply chains, which will need to be significantly eased before inflationary pressures subside,” the miner said.

Financials closed 0.6 per cent lower as the big four banks closed relatively flat bar ANZ, down 1.32 per cent to $21.64 after confirming it was in discussions to acquire MYOB earlier in week.

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Following Thursday’s historically low unemployment rates and decades-high inflation in the US, Commonwealth Bank’s head of Australian economics Gareth Aird revised the bank’s estimate of a 2.1 per cent cash rate by the end of the year to 2.6 per cent.

“We have revised our central scenario for the RBA based on the latest labour force data, a further modest upward adjustment to our near term inflation forecasts and our expectation that the RBA will follow the path of a number of other global central banks in aggressively hiking the policy rate over coming months,” Aird said.

Aird expects back-to-back rate hikes of 50 base points in August and September followed by a 25bp rise in November.

Tweet of the day:

Quote of the day: “We have this generation of people who grew up in the GFC seeing their parents’ financial pain, and they simply do not trust our financial system. They see all the fees, all the opaqueness, so they’re out there building something different,” DigitalX chief executive Lisa Wade said. “Just like when the internet was born, nothing can stop this. Bitcoin is the poster child currency for that movement and the younger generation who do not want to use our money.”

You may have missed: Founder and former chief executive of Booktopia, Tony Nash, was ousted by the board of the online bookseller following a steep decline of market value and share price over the last year. Shares in the company, which once traded at a high of $3 in August last year, gained 3.2 per cent on Friday to 32¢.

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