Australia's GDP expanded 0.3 percent on the quarter in the three months to September, up slightly from the 0.2 growth recorded in the three months to June but below the consensus forecast of 0.5 percent. The economy has now grown at a weak pace for two years, reflecting the impact of tight monetary policy settings. GDP rose 0.8 percent on the year in the three months to September, slowing from 1.0 percent in the three months to June and also below the consensus forecast of 1.0 percent. This is the weakest year-over-year growth since the pandemic.

Household consumption and private investment were both flat on the quarter after a previous increase of 0.2 percent, while net trade made only a small contribution to headline growth of 0.1 percentage points. Government spending increased 0.3 percent on the quarter.

Today's data cover the period in which officials at the Reserve Bank of Australia continued to leave policy rates on hold. At their latest meeting, held last month, officials left rates on hold again and again advised that they could not rule out further rate increases. Today's data, however, suggest that previous policy tightening is continuing to weigh heavily on demand and activity.

GDP is expected to improve after an uninspired first half as government stimulus measures lift consumption. The consensus sees growth at 0.5 percent on the quarter in Q3 versus 0.2 percent in Q2, and a 1.0 percent year on year rise in Q3 versus 1.0 percent in Q2.

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.