ASX to open higher following release of Federal Budget

Market Reports

by David Chau

The Australian share market is set to open higher, according to the positive direction of ASX futures this morning.  This is in contrast to Wall Street, which had a mixed performance this morning, and isn’t providing much of a lead – with most S&P 500 sectors finishing in the red.

Yesterday night, Treasurer Scott Morrison unveiled the Federal Budget – with some of the winners being:

• first home buyers (who’ll be able to save up for a home deposit by salary sacrificing into superannuation),
• disabled people (since the National Disability Insurance Scheme will be fully funded by a 0.5% increase in the Medicare levy after two years),
• and Sydney-siders (who will benefit from increased infrastructure spending like the construction of a second international airport).

However, the budget will have a negative impact on big banks – with a new tax on their liabilities starting on 1 July which is expected to raise $6.2 billion in revenue for the government. The big four banks shed between 2% and 3.85% yesterday, with CBA stocks being the hardest hit.

Markets

Wall Street closed mostly lower this morning: with The Dow Jones Industrial Average down 0.2 per cent to 20,976, the S&P 500 slipped 0.1 per cent to 2,397 and the NASDAQ gained 0.3 per cent to 6,121.

European markets closed near twenty-one month highs: London’s FTSE gained 0.6 per cent, Paris added 0.3 per cent and Frankfurt was up 0.4 per cent.

Asian markets were mixed: Tokyo’s Nikkei dropped 0.26 per cent, Hong Kong’s Hang Seng was up 1.3 per cent, and China’s Shanghai Composite was flat.

Australia’s ASX 200 finished lower yesterday – shedding 31 points (or 0.5 per cent) to 5,840. On the futures market the SPI has risen 19 points.

Company news

Spotless Group Holdings Ltd (ASX:SPO) has entered into an agreement to purchase Cabrini Linen Service, a specialist linen and laundry business that services the Victorian healthcare industry. The acquisition includes a number of number of multi-year contracts, including an initial ten-year contract with Cabrini Hospital. Spotless expects the acquisition to complete in July. The company also expects this deal to provide it with a market-leading position as a service provider to the healthcare market. Yesterday, Spotless shares closed 0.45% higher at $1.10.

Ex-dividends

Resmed (ASX:RMD) will pay a dividend of 3.09 cents, unfranked.

Currencies

The Australian Dollar at 7:30AM has weakened against some major currencies. It is now buying $US73.44 cents, 56.78 Pence Sterling, 83.76 Yen and 67.55 Euro cents.

Commodities

Gold has fallen $5.80 to $US1,221 an ounce.
Silver is down $0.07 to US$16.18 an ounce.
Oil has dropped $0.32 to $US46.20 a barrel. 

David Chau

Finance News Network
David joined FNN in April 2016. In addition to presenting the Market Outlook and latest business news stories, David interviews senior economists and CEOs of ASX-listed companies. Prior to working for FNN, David was a litigation lawyer.