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The SPI is pointing to a lower start for the Australian share market as local traders get set to absorb the Australian Government’s Federal Budget release last night. Over the current financial year the deficit is forecast to be $41.1 billion, or 2.6 per cent of GDP, but predicted to narrow to 0.4 per cent of GDP over the next four years. Also included a lower tax rate for small businesses, a $3.5 billion childcare package, a crack down on multinational tax avoidance and a GST on digital products sold by international companies.
Global markets
Wall Street traded and ended in the red but off the session low on Tuesday: The Dow Jones Industrial Average lost 0.2 per cent to close at 18,068 the S&P 500 lost 0.3 per cent to close at 2,099 and the Nasdaq lost 0.4 per cent to close at 4,976.
European markets retreated on Tuesday: London's FTSE 100 dropped 1.4 per cent, France's CAC 40 dropped 1.1 per cent and Germany's DAX dropped 1.7 per cent.
Asian markets put in a mixed trading performance yesterday: Japan’s Nikkei added 0.02 per cent, Hong Kong’s Hang Seng fell 1.1 per cent, and China’s Shanghai Composite gained 1.6 per cent.
The Australian share market snapped a five-day losing streak and jumped 0.9 per cent ahead of the release of the Federal Budget yesterday evening: The S&P/ASX 200 Index gained 50 points to close at 5,675 on Tuesday. On the futures market the SPI is 16 points lower.
Currencies
The Australian dollar at 7:30am was buying $US0.7982, 50.93 Pence Sterling, 95.67 Yen and 71.16 Euro cents.
Economic news due out today
Australian Bureau of Statistics: Wage price index for March quarter
Westpac Banking Corporation (ASX:WBC)-Melbourne Institute: Consumer sentiment survey
Federal Budget perspectives
National Australia Bank Limited (ASX:NAB) has highlighted the modest but nonetheless positive market reaction to the Budget. The bank says it does not pose any immediate threat to the AAA rating and following its release the dollar pushed higher and bond futures improved. NAB believes the budget is relatively neutral in its impact on the broader economy and new expenditures have been broadly offset by savings. After NAB raised $2.7 billion from institutional investors yesterday and exited a trading halt its shares fell 1.87 per cent to close at $34.54 on Tuesday.
AMP Limited (ASX:AMP) has forecast this year’s Budget should be far more positive for confidence than last years but believes a return to surplus is looking more distant. AMP has also noted the shift in focus from budget repair towards supporting growth and fairness and says new spending has been more than offset by various savings. AMP Capital Investors Chief Economist Shane Oliver believes the impact on the share market is likely to be minimal. Shares in AMP rose 0.63 per cent to close at $6.39 on Tuesday.
Ex-dividends
BT Investment Management Limited (ASX:BTT) paying a 17 cent, 40 per cent franked dividend
Managed Accounts Holdings Limited (ASX:MGP) paying a 0.2 cent unfranked
United Overseas Australia Limited (ASX:UOS) paying a 2 cent unfranked
Westpac Banking Corporation (ASX:WBC) paying a 93 cent fully franked
Commodities
Gold has added $9.40 to $US1,192 an ounce for the June contract on Comex.
Silver has risen $0.21 to $16.53 for July.
Copper has lifted $0.03 to $2.93 a pound.
Oil has firmed $1.50 to $US60.75 a barrel for June light crude in New York.
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