The Australian Securities Exchange (ASX) is poised for a modest rise in morning trade, with futures indicating a 0.2% opening gain. This comes ahead of the highly anticipated release of Australia’s GDP figures, which are expected to provide fresh insights into the country’s economic health. Meanwhile, Wall Street experienced an uplift, driven by expectations of an interest rate cut by the US Federal Reserve.
Greens Senator Nick McKim recently questioned the Reserve Bank of Australia (RBA) regarding the record levels of credit extended to property investors. RBA Deputy Governor Michele Bullock assured that while the central bank does not have immediate concerns about risky lending to investors, there is potential for property investors to exacerbate housing price cycles, which could impact owner-occupiers.
Economic Indicators and Market Reactions
As the ASX prepares for a potential rise, the Australian dollar has increased by 0.4% to 65.6 US cents, marking a one-year high against the Japanese yen at 102 yen. This follows an optimistic session on Wall Street, where investors are betting on a possible interest rate reduction from the US Federal Reserve, expected next Thursday. The likelihood of a 0.25 percentage point rate cut has surged to 89.2%, according to the CME FedWatch tool.
Major US stock indexes saw moderate gains, with the Dow Jones and S&P 500 rising by 0.4% and 0.3%, respectively. The tech-heavy Nasdaq Composite climbed 0.6%, buoyed by strong performances from tech giants like Apple, Nvidia, and Microsoft, each rising around 1%, while Intel soared nearly 8%.
Australia’s Economic Growth in Focus
The release of the latest GDP figures by the Australian Bureau of Statistics (ABS) at 11:30 am AEDT will be a focal point for economic observers. Economists anticipate a 0.7% growth in the third quarter of 2025, with an annual increase of 2.2%, marking an improvement from the previous quarter’s 0.6% growth and 1.8% annual rise.
Commonwealth Bank economists project that growth in the September quarter was driven by both private and public demand. Public demand rebounded after several softer quarters, while private demand surged, fueled by investments in dwellings and machinery.
“We expect GDP growth of 0.7%/qtr in September, just a slight acceleration from 0.6% growth in the June quarter. A 0.7% quarterly outcome would see the pace of annual growth in the Australian economy accelerate to 2.1%,” noted economists Ashwin Clarke, Lucinda Jerogin, and Belinda Allen.
Inflation and Economic Outlook
Turning to inflation, RBA Deputy Governor Bullock highlighted the central bank’s focus on the ‘trimmed mean’ measure of core inflation, influenced by government energy subsidies affecting the headline number. Despite inflation surpassing forecasts, unemployment rates have remained stable.
Senator Paterson questioned whether inflation had exceeded expectations, to which Bullock responded, “Certainly inflation has priced on the upside. The unemployment rate hasn’t,” indicating that unemployment is largely as anticipated.
As for household consumption, it is expected to have slowed in the September quarter due to inflationary pressures. Residential construction, however, is forecast to see a 3% lift, driven by new work and alterations.
Government’s AI Strategy and Cybersecurity Concerns
In a separate development, the Australian government unveiled its roadmap for artificial intelligence development and adoption, opting to delay mandatory guardrails initially proposed to protect Australians from potential AI-related risks. Professor Nicholas Davis of the UTS Human Technology Institute criticized the plan, stating that Australia’s data protection and privacy rules are “woefully out of date” compared to global standards.
Professor Davis urged for legislative measures to safeguard online safety, privacy, and child protection, emphasizing the need for robust regulations in the digital age.
Meanwhile, small businesses face growing challenges from fraudulent chargeback claims, where customers initiate transaction reversals through banks, often without legitimate cause. This trend has prompted calls for enhanced protections against cybercrime, as retailers struggle to recover losses from such fraudulent activities.
As the ASX prepares for its opening, investors and analysts alike will be closely monitoring the GDP figures for further insights into Australia’s economic trajectory. Stay tuned for more updates as the day unfolds.
