AU Evening Wrap | ASX 200 Plunges 1.9%; Orora Rallies, BHP Drops 2.5%

U.S. Manufacturing Data Raises Economic Slowdown Concerns
Economic activity in the U.S. manufacturing sector has again missed forecasts, shifting investor focus to the potential for an economic slowdown. Matt Sherwood, Perpetual's head of investment strategy, noted that U.S. manufacturing data historically predicts U.S. earnings well. He indicated that the U.S. corporate sector appears vulnerable to earnings disappointments, especially in an economy where growth is more likely to slow than accelerate, making it challenging for companies to expand margins and meet high earnings growth expectations.

Australia's GDP grew by 0.2% in Q2 2024, meeting expectations and up from 0.1% in Q1. Annually, GDP increased by 1.0%, slightly down from 1.1% in the prior quarter. Capital spending fell by 0.1% after a 0.9% drop in Q1, while the chain price index declined by 0.9% following a 0.8% rise. Final consumption increased by 0.3%, down from 0.6% in the previous quarter.

Iron ore prices fell to a two-week low, dropping below $100 a ton due to weak signals from China's steel market. Futures in Singapore declined by 2.7% on Tuesday, adding to a 4.2% drop on Monday — the largest in three months. Disappointing Chinese manufacturing and property data have dampened hopes for a demand recovery. Goldman Sachs described the outlook for iron ore prices as "challenging." Port stockpiles are above 150 million tons, maintaining pressure on prices. Futures in Singapore traded at $94.70 a ton, close to their lowest point during the August selloff. Miners like BHP Group Ltd. believe iron ore will find support below $100, stressing high-cost producers.