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Australia: Market moves on from the budget

Market moves on from the budget

by Ric Spooner (Chief Market Analyst, CMC Markets)
14 May 2014

At the end of the day, most of the initiatives in last night’s budget had been signalled in advance leaving markets unchanged in pre-open trading. Markets appear relatively comfortable that the Government has managed to find appropriate middle ground between the twin imperatives of making a start on fixing the budget’s fiscal deficit while not bearing down too heavily on economic growth.

The immediate impact on consumer confidence and spending will be a key issue for companies reliant on discretionary consumer spending. While many of the budget initiatives will not begin to bite until 2015/16 and beyond there will be enough of a fiscal drag on the economy next financial year to have an impact.

This morning’s news that CBA has increased quarterly cash earnings by 16% over the past year in what looks to be a relatively clean result should do nothing to dampen recent solid market sentiment.

Markets are also being supported by ongoing merger and acquisition activity with yesterday’s news of a bid for PanAust serving as a reminder to investors that occasional large gains in companies that become targets are likely to be an ongoing feature of the market landscape.

Major economic releases over the past 24 hours haven’t given markets any reason to maintain yesterday’s strong momentum. US retail sales growth retreated from the strong post winter rebound while China’s industrial production continued in the relatively subdued 8.5-9.0% band that has applied in recent months.

www.cmcmarkets.com.au

ENDS

© Scoop Media

 
 
 
 
 
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