Australia shares slide 2% as GDP data dampens early rate cut hopes
Economy stuck in slow lane in June quarter
Commodity stocks top drag
Fortescue sinks 8.4%
Updates to close
By Rishav Chatterjee
Sept 4 (Reuters) -Australian shares plunged nearly 2% on Wednesday after data showed the country's economic growth remained subdued last quarter amid still-high inflation, dampening hopes of an early interest rate cut by the central bank.
The S&P/ASX 200 index .AXJO fell 1.9% to 7,948.7 points.
The country's economic weakness persisted in April-June, official data showed, as higher-for-longer borrowing costs and sticky inflation kept consumer spending in check.
That does not help the odds of an early rate cut by the Reserve Bank of Australia (RBA), with Governor Michele Bullock having cautioned about high inflation.
Citi analysts expect the central bank will not cut rates until February, with the risk it could delay a move until May.
"The consumer is feeling the brunt of the RBA's tightening as rising mortgage payments along with a lift in tax payable and the effects of elevated inflation have weighed on household purchasing power," said Gareth Aird, head of Australian Economics at CBA's global economics and markets research division.
"Businesses by extension suffer as growth in overall sales to consumers slow. Investment plans have moderated in response."
Even financials .AXFJ, which usually benefit from higher rates, fell 2%, with CBA CBA.AX dragging 2.4%.
However, commodity stocks led the drag among sub-indexes, tracking a broader underperformance in their Western peers and falling underlying prices.
Miners .AXMM slumped 3.3%. Fortescue FMG.AX fell 8.4%, among the top losers, on trading ex-dividend. BHP BHP.AX and Rio Tinto RIO.AX dropped over 2% each on falling iron ore prices.
Energy companies .AXEJ dropped 2.7% as oil prices continued to decline.
Among the few bright spots was Orora ORA.AX, which rose 7.2% and was the benchmark's top gainer, on the glass bottles and can maker's plan to sell its North American business to cut debt and ramp up investment in a domestic plant.
New Zealand's benchmark S&P/NZX 50 index .NZ50 closed 0.2% higher.
Reporting by Rishav Chatterjee in Bengaluru; Editing by Savio D'Souza
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