Australia's GDP expanded 0.4 percent on the quarter in the three months to June, matching the revised increase recorded in the three months to March. GDP rose 2.1 percent on the year, down from 2.4 percent previously.

Consumer spending was steady in the three months to June, increasing 0.2 percent on the quarter, as it did in the three months to March. Private investment, however, recorded weaker growth, increasing 0.6 percent after advancing 2.0 percent previously. Net trade made a positive contribution to headline GDP growth of 0.8 percentage points after making a negative contribution of 0.3 percentage points previously.

Today's data cover the period in which officials at the Reserve Bank of Australia continued to raise policy rates aggressively in response to strong inflation pressures. Officials then paused at their meetings in July, August, and September. At their latest meeting earlier this week, officials noted that the economy is currently growing below its trend rate and is expected to do so"for a while". They have also acknowledged that previous policy tightening has created downside risks for the near-term growth outlook.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy and is usually released early in the third month after the reference period.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower.