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ASX up 0.04% as RBA lowers economic growth predictions

The Reserve Bank has lowered its economic growth predictions and expects inflation to slow down faster than previously estimated. According to its quarterly economic update, it anticipates the gross domestic product (GDP) to expand by 0.9% by the end of the year, down from the previous forecast of 1.2% made in May.

Next year, GDP growth is expected to be 1.6%, slightly lower than the initial expectation of 1.7%.

On the inflation front, the central bank now predicts Consumer Price Index to slow down to 4.1% by December, compared to the May forecast of 4.5%. For the following year, inflation is projected to be 3.3%, as opposed to the previous estimate of 3.2%.

The bank expects price growth to return to its target range of 2% to 3% in 2025 at 2.8%.

At noon, the S&P/ASX 200 is 0.04 per cent higher at 7,314.70.

The SPI futures are pointing to a rise of 8 points.

Best and worst performers

The best-performing sector is Energy, up 1.12 per cent. The worst-performing sector is Health Care, down 1.79 per cent.

The best-performing large cap is Incitec Pivot (ASX:IPL), trading 1.82 per cent higher at $3.075. It is followed by shares in Whitehaven Coal (ASX:WHC) and Rio Tinto Group (ASX:RIO).

The worst-performing large cap is ResMed (ASX:RMD), trading 10.32 per cent lower at $30.355. It is followed by shares in Mercury NZ (ASX:MCY) and Northern Star Resources (ASX:NST).

Asian news

Asia-Pacific markets were mixed on Friday as rising bond yields continue to put pressure on equities in the wake of the U.S. credit downgrade.

IG market analyst Tony Sycamore noted the yield on the U.S. 30 year bond rose by 14 basis points overnight to 4.30%, taking the yield towards its October 2022 4.42% high.

“The move higher in long end yields is being driven by lumpy bond issuance, resilient data and Fitch’s downgrade earlier in the week,” Sycamore said.

In Asia, investors will look to the Reserve Bank of Australia’s monetary policy statement, which will detail the central bank’s rationale after it unexpectedly held rates at 4.1% on Tuesday.

Japan’s Nikkei 225 was up marginally, while the Topix was also trading close to the flatline.

South Korea’s Kospi rose 0.26% and the Kosdaq climbed 0.19%.

Hong Kong’s Hang Seng index popped 1.8% on its open, while mainland markets were more mixed. The Shanghai Composite slid marginally while the Shenzhen Component was up 0.85%

Company news

Melbana Energy (ASX:MAY) announced that the planned Total Depth of the Alameda-2 well has been reached ahead of schedule. Executive Chairman, Andrew Purcell, commented: “Excellent quality logs have been obtained over the entire Amistad interval – a great improvement on last time when logs could not be obtained over some of the most productive units.” Shares are trading 5 per cent higher at 10.5 cents.

Azure Minerals (ASX:AZS) announced that 209m high-grade lithium intersection at their Andover Lithium Project. In response, Managing Director Tony Rovira said, “Encouragingly, the results suggest the mineralisation remains open along strike and to depth.” Shares are trading 16.6 per cent higher at $2.53.

Empire Energy (ASX:EEG) have provided shareholders with an update on the 100% owned EP187 located in the Beetaloo Basin of Northern Territory. Following a planned 5 month shut in period, the Carpentaria 3H well has been reopened for extended production testing. Testing may take up to 90 days and will provide the company with important data that will allow them to examine the benefits of “soaking” the well. The Extended Production Test will also provide the industry standard “IP30” or 30 Day Initial Production data – which will assist in delineating well production profiles for the Carpentaria Pilot Project. The Pilot Project is targeting Final Investment Decision (FID) later this year. Shares are trading 3.33 per cent lower at 14.5 cents.

Commodities and the dollar

Gold is trading at US$1971.40 an ounce.

Iron ore is 3.0 per cent lower at US$103.75 a tonne.

Iron ore futures are pointing to a 0.82 per cent rise.

One Australian dollar is buying 65.85 US cents.