Australia Market rises for third day

The Australian share market finished higher for third day in row on Friday, 23 July 2021, with the ASX 200 reaching a new record closing high on following the broadly positive cues from Wall Street overnight. However, market gains capped after a survey showed the services sector in the country fell hard into contraction territory in July.

At closing bell, the benchmark S&P/ASX200 advanced 7.95 points, or 0.11%, to 7,394.35. The broader All Ordinaries increased 11.98 points, or 0.16%, to 7,670.88.

S&P/ASX200 sectors were mixed, with gains in healthcare, tech, and consumer staples stocks outweighed losses in shares of energy and financial stocks.

ECONOMIC NEWS: Australia Services Sector Falls Into Contraction In July- The growth streak for the Australian private sector ended in July according to Flash PMI data which showed business activity in contraction, the latest survey from Markit Economics revealed on Friday. Survey respondents signalled that renewed restrictions, brought about by the spread of the Delta variant of the COVID-19 virus, affected demand and output in the country. Business sentiment likewise softened in the month. That said, employment and price gauges remained in growth, albeit showing softer readings compared to June.

Plunging from 56.7 in June (final reading) to 45.2 in July, the IHS Markit Flash Australia Composite Output Index fell to a 14-month low and pointed to the first contraction seen since August 2020. While heightened COVID-19 restrictions in Victoria had weighed on Australia's economic performance in June, the extension of the movement restrictions to a greater number of states into July further affected overall private sector output.

Demand conditions softened significantly in July, particularly for services as order book volumes slipped into contraction. While manufacturing new orders managed to remain in growth, anecdotal evidence suggested that the COVID-19 movement restrictions contributed to the rate of expansion easing to the slowest since last November

The IHS Markit Flash Services Business Activity Index slipped to 44.2 in July, from a final reading of 56.8 in June. This marks the first service sector contraction in 11 months. July's reading was also the lowest since May 2020. The IHS Markit Flash Manufacturing PMI fell to 56.8 in July from a final reading of 58.6 in June.

CURRENCY NEWS: The Australian dollar changed hands at $0.7368, above levels below $0.732 seen earlier in the trading week.

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