After delivering an eleventh straight month of gains by finishing 1.9% higher in August, the S&P/ASX 200 (ASX: XJO) fell 0.1% to begin September.
Given the busy month that was August, market volatility will likely recede as investors turn to the outlook for vaccination rates and border closures.
Wesfarmers goes ex-dividend, Metcash sales weaken
On Wednesday, however, it was all about the consumer sector with both discretionary and staples falling by over 1%.
The former was due to Wesfarmers Ltd (ASX: WES) dropping 3.3% after going ex-dividend and the latter after Metcash Limited (ASX: MTS) reported weaker sales that sent Woolworths Group Ltd (ASX: WOW) down in unison.
Grocery retailer and key beneficiary of lockdowns in 2020, Metcash fell 2.5% after offering an insight into the beginning of the new financial year. Interestingly the company reported by 2019 and 2020 comparables with supermarket sales growing 13% on the former but falling close to 2% on last year’s figures.
Liquor sales continued to strengthen as those stuck at home in the most populous states were forced to consume more at home – sales were close to 10% higher than even last year’s figures.
Finally, hardware has gained significantly following the Total Tools acquisition and benefitting from the fact that most construction has continued during lockdowns. Hardware sales grew by over 16% in the first 16 weeks of the financial year.
GDP surprises again
All eyes were on the June quarter GDP result, with the spread of predictions ranging from the beginning of another recession to a more positive below trend result.
Once again, the consensus was wrong and significantly so, with expectations of 0.3% growth beaten by a result that saw the Australian economy expand by 0.7%.
It is somewhat surprising that government spending was the key driver in the June quarter, with public investment contributing 0.4% and government consumption also 0.3% higher.
The result took the 12-month expansion to over 9%, however, the worst is still to come as lockdown hit in the second quarter and show no signs of easing until well into November.
AUD, bond rates higher
The unexpectedly strong GDP result sent the ASX up over the afternoon, but also contributed to a rally in the AUD which reached 0.73 US cents after falling as low as 70 cents.
Similarly, the 10-year bond rate also spiked as traders price in the threat of higher interest rates however unlikely this may be.
ASX 200 today
The ASX 200 is tipped to open lower on Thursday, following a mixed lead from US markets overnight.
The Flight Centre Travel Group Ltd (ASX: FLT) share price will be on watch after the company announced plans to launch into the Japanese corporate travel market through a joint venture.