ASX 200 ends above 8,500 as weak GDP data boosts rate cut hopes

By: Team Kalkine | Jun 04, 2025 | Read Time : 10 Mins

Image Source : Krish Capital Pty Ltd

Index Update: The S&P/ASX 200 closed higher on Wednesday, extending previous day’s rally. The index rose by 75.10 points or 0.89% to finish at 8,541.80, setting a new 50-day high, breaching the psychologically important 8,500-point level. The rally came despite sluggish economic growth and global tariff tensions. Recent data showed minimal economic growth in the first quarter, boosting expectations of a potential rate cut. Over the past five days, the index has advanced 1.73% and now sits just 0.85% below its 52-week high. Nine of the eleven sectors ended in positive territory, with the energy sector leading the gains, up 2.26% for the day and 1.41% over the past week.

Macro Update: Australia's economy grew modestly in the March quarter, with real GDP rising just 0.2%, according to the latest National Accounts released by the Australian Bureau of Statistics (ABS) on Wednesday. This marked a sharp slowdown from the 0.6% expansion seen in the previous quarter and came in below market expectations of 0.4%. On an annual basis, growth held steady at 1.3%, missing forecasts for a rise to 1.5% and remaining well below the historical average of 2.5%. Meanwhile, GDP per capita slipped back into negative territory, contracting by 0.2% after a slight increase in the prior quarter.

Top Market Movers: The top gainers on the ASX included Zip Co Limited (ASX: ZIP), which surged 13.62% to AUD 2.21, followed by Paladin Energy Ltd (ASX: PDN), rising 9.81% to AUD 6.49, and Mineral Resources Ltd (ASX: MIN), up 9.19% to AUD 20.20. On the losing end, Nufarm Limited (ASX: NUF) declined 4.89% to AUD 2.14, Brickworks Limited (ASX: BKW) dropped 4.41% to AUD 33.37, and West African Resources (ASX: WAF) fell 4.24% to AUD 2.71.

Commodity Update: The dollar edged lower on Wednesday ahead of key U.S. employment data and trade negotiations led by President Trump. A Wednesday deadline loomed for countries to present trade offers, coinciding with a tariff hike on steel and aluminium. Meanwhile, gold rose 0.34% to $3,380.50, silver gained 0.30%, and copper climbed 0.17%. Brent crude inched up 0.10% to $65.58 amid rising OPEC+ output and global economic concerns.

Our Stance: The S&P/ASX 200 extended its rally on Wednesday, closing 0.89% higher and breaching the key 8,500-point level, driven by hopes of rate cuts amid weak GDP data. Despite a modest 0.2% quarterly growth and falling GDP per capita, investor sentiment remained resilient, with energy stocks leading sector gains. Performances from Zip Co and Paladin Energy buoyed the index, while global tariff tensions and sluggish growth kept caution in play. Commodity prices edged up, reflecting a mixed global economic outlook.

In its latest session, the S&P/ASX 200 Index advanced 75.10 points to close at 8,541.80, reflecting continued investor confidence. The gain was accompanied by a bullish candlestick pattern and strong trading volumes, indicating solid underlying momentum. Technically, the index remains above its 21-period Simple Moving Average (SMA), reinforcing the short-term bullish outlook. A critical resistance level lies at 8,615.40. A decisive breakout above this level could mark a stronger recovery and potentially alter market dynamics favorably. On a weekly timeframe, the index also trades above its 50-period SMA, providing a robust base for potential longer-term upside. To maintain the current momentum, clearing the 8,615.40 resistance is key. Success here could open the door for further gains and bolster overall market sentiment in the sessions ahead.

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