The Australian share market has remained in positive territory despite weaker-than-expected economic growth in the first quarter of 2025. The country’s GDP expanded by just 0.2%, a sharp slowdown from the 0.6% recorded in the final quarter of 2024, and lower than economists had forecast.
Market Overview (as of 7:45am AEST):
- ASX 200 futures: Up 0.3% to 8,507
- Australian dollar: Slight rise to 64.64 US cents
- Global indices: Gains across S&P 500, Nasdaq, FTSE, and EuroStoxx
- Commodities: Spot gold steady at $US3,352/oz; Brent crude up 1.5% to $US65.62/barrel; Iron ore down 0.9%; Bitcoin slightly lower at $US105,594
RBA May Cut Rates in July
Following the disappointing GDP figures, some economists believe the Reserve Bank of Australia could reduce interest rates in July. Ben Udy from Oxford Economics noted that global uncertainty and declining confidence could put further pressure on consumption and investment.
The RBA previously forecast annual GDP growth of 1.8% by June, but with just 1.3% growth recorded over the past year, a stronger performance will be required in the upcoming quarter to meet that projection.
Public Spending and Weather Events Drag Down Growth
The Australian Bureau of Statistics attributed the slow growth partly to decreased public sector spending and the impact of extreme weather. Notably, government consumption showed no increase, while household savings rose due to government support and insurance payouts.
Private investment rose by 0.7%, largely due to increases in construction and dwelling investments.
Additional Economic Headlines:
- SUV Sales Still Strong: SUVs now account for 60% of all new vehicle sales in Australia. Toyota led May sales, followed by Ford and Mazda.
- RBA Flags Global Risk: Assistant Governor Sarah Hunter cited global trade uncertainty, including US tariffs, as a risk to the domestic outlook.
- Crypto ATMs Under Scrutiny: AUSTRAC is investigating widespread misuse of crypto ATMs, with suspicions that 1 in 10 transactions may be linked to illegal activity.
- Minimum Wage to Rise: Starting July 1, Australia’s minimum wage will increase by 3.5% to $24.95 per hour.
- RAMS Under Legal Fire: ASIC has filed legal action against RAMS over systemic misconduct in mortgage lending, including fake documents and regulatory breaches.
- Virgin Australia IPO: The airline plans to raise $685 million through an ASX listing, valuing the company at $2.32 billion.
- Wall Street Gains: US markets closed higher, buoyed by optimism over trade talks and strong performance by tech giants like Nvidia.
