ASX200 edges higher ahead of Wednesday AU Q2 GDP release

Wednesday sees the release of Australia's Q2 GDP report at 11.30 am. The report predates current lockdowns in Sydney and Victoria, and because of this, the data is less valuable than usual.

Stocks (2)

Nonetheless, the release is expected to garner serious media attention locally because a heavy contraction in GDP in Q3 is already guaranteed due to lockdowns.


Should Wednesdays Q2 data also show a contraction, it will mean the Australian economy will fulfil the technical definition of a recession for the second time in two years; two consecutive quarters of negative GDP. 

This morning saw the release of some key inputs into Wednesday's GDP data. Q2 Company Profits were much stronger than expected (+7.1% vs. 2.5% exp), driven by strong commodity prices lifting mining profits. Partly offset by a further step-down in government subsidies in the quarter. 

However, Q2 Inventories rose less than expected (0.2% vs. 1.2% exp), bringing into question the strength of the rebuild following a sharp rundown in 2020 that will likely subtract from quarterly growth. 

The final partials drop tomorrow morning in the shape of Balance of Payments data, expected to show Net Exports fell in real terms, driven by a decline in export volumes that may subtract as much as 1.5ppt off GDP growth. 

For the record, the range of Q2 GDP estimates is from -0.1% to a more optimistic +1%. The wide range reflects the many moving parts that go into GDP, Australia's average expenditure, incoming, and production estimates. 

Turning to the charts, after falling from its 7632.8 high of Mid-August, the recovery from the 7429 low is viewed as the incomplete second leg (Wave b) of a three-wave corrective sequence. A break below the 7429 low would indicate that the third leg lower (Wave c) is underway towards trend channel support near 7320/00, which remains our preferred buying level. 


ASX200 Daily Chart

 Source Tradingview. The figures stated areas of August 30th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

More from ASX

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.