GDP sees the market take its foot off the gas

The Australian market has continued yesterday's rally with the Australia 200 Index up 25 points after the GDP results introduced a pull-back from its high.

By CMC Markets · 3 Dec 2014

By CMC Markets ·
3 Dec 2014

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The Australian market has continued yesterday’s rally with the Australia 200 Index up 25 points after the GDP results introduced a pull-back from its high.

Gross Domestic Product (GDP) advanced 0.3 percent from the September announcement but missed the 0.7 percent expected by analysts resulting in a fall of the Australian Dollar and a 15 point fall in the index. GDP is an indicator of economic health and missing the estimate suggests our economy is more sluggish then the broad market anticipated and will help to lower the expectation of investor returns.

The AUD/USD declined from 84.60 to 84.00 US cents, a four year low, within moments of the GDP announcement.

TEN Network (TEN) has declined 7.5 percent to 22 cents per share after Discovery Communications and Foxtel lodged a $605 million conditional, non-binding, takeover bid of 23 cents per share. Several weeks ago, Discovery and Foxtel made a 26 cent offer that was revised down after management briefings.

Trading volumes are lower today and likely to stay deflated in the lead up to Christmas.

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Frequently Asked Questions about this Article…

How did the Australian GDP results impact the stock market?

The Australian GDP results showed a 0.3 percent increase, which was below the expected 0.7 percent. This led to a pull-back in the market, with the Australia 200 Index rising only 25 points and the Australian Dollar falling to a four-year low.

What does a lower-than-expected GDP mean for investors?

A lower-than-expected GDP suggests that the economy is more sluggish than anticipated, which can lower investor expectations for returns. This can lead to cautious market behavior and potential adjustments in investment strategies.

Why did the Australian Dollar fall after the GDP announcement?

The Australian Dollar fell to 84.00 US cents, a four-year low, because the GDP growth was below expectations, indicating weaker economic health, which often leads to a decrease in currency value.

What happened to TEN Network's stock price after the takeover bid?

TEN Network's stock price declined by 7.5 percent to 22 cents per share following a revised takeover bid from Discovery Communications and Foxtel, which offered 23 cents per share, down from a previous offer of 26 cents.

Why was the takeover bid for TEN Network revised down?

The takeover bid for TEN Network was revised down from 26 cents to 23 cents per share after management briefings, which likely provided new insights or considerations that influenced the offer.

How are trading volumes expected to change as the holiday season approaches?

Trading volumes are currently lower and are expected to remain deflated as the market approaches the Christmas holiday season, which is typically a quieter period for trading.

What is the significance of the Australia 200 Index rising 25 points?

The Australia 200 Index rising 25 points indicates a continuation of the market rally from the previous day, despite the GDP results being lower than expected. It reflects a cautious optimism among investors.

How can investors contact CMC Markets for further commentary?

Investors can contact CMC Markets for further commentary by calling 02 8221 2124 for more insights and analysis on market movements and economic indicators.