What happened
Australia's GDP grew by 0.4 per cent in the June quarter, exceeding market expectations of 0.3 per cent, while annual growth reached 2.1 per cent against forecasts of 1.8 per cent. Following the hotter-than-expected data alongside strong spending and inflation figures, money market pricing for a Reserve Bank of Australia interest rate hike at the late September meeting jumped from 53 per cent to 73 per cent.
Why it matters here
Higher interest rates increase borrowing costs for businesses and households while driving up Australian government bond yields. For equity investors, the prospect of further monetary tightening tends to compress valuation multiples, particularly for growth and technology stocks, while supporting the Australian dollar and bank interest margins.
What to watch
The Reserve Bank of Australia's next monetary policy board decision and statement on September 29, alongside upcoming employment data and monthly inflation indicators.
Source
youtube.com