Australian investors will have an opportunity to pass judgement on the Federal Budget on Wednesday, with prices easing as the share market opens on Wednesday, setting the scene for a fourth successive day of losses.
Australian Treasurer Jim Chalmers on Tuesday night handed down a budget focused on cost-of-living relief, tax reforms and investment in housing, healthcare and renewable energy while supporting economic growth and easing inflation pressures.
CommSec Equity Market Strategist James Gruber said the annual fiscal statement contained few surprises given how much detail had been released in recent weeks, including increased capital gains taxes on assets like shares and property.
“The ASX has lagged other major markets over the past week or two quite a bit (which) I think is partly factoring in a lot of those budget leaks,” he said.
A measure that had received less attention was the higher taxes on discretionary trusts, Gruber said.
An 0.11% drop in the Australian Securities Exchange’s (ASX) main benchmark is in prospect at 10:00 am AEST (12:00 am GMT Tuesday), based on futures trading pricing the June ASX 200 contract 10 points below the previous settlement at 8,675 points.
Wall Street provided a mixed backdrop leading into the ASX session, with two of the three indexes ending lower than recent record highs amid profit taking after higher-than-expected inflation data and Middle East ceasefire concerns.
Although the Dow Jones Industrial Average added 0.1%, the S&P 500 lost 0.2%, and the Nasdaq Composite shed 0.7%, they remain near record highs.
Investors are focused on valuations, macroeconomics and geopolitical developments as the United States quarterly reporting season concludes.
"Our call has been for the market to flatten out simply because greed occurs during earnings season and fear after," InfraCap CEO and portfolio manager Jay Hatfield was quoted as saying in a Reuters article.
Stocks in focus today include trading updates from Commonwealth Bank of Australia (ASX: CBA), Aristocrat Leisure (ASX: ALL) and Accent Group (ASX: AX1).
The Australian market had closed lower for a third straight session on Tuesday, with the ASX 200 dropping 0.4% to 8,670.7 points as nine of the 11 sectors ended in the red, with technology stocks leading the pack down.
In Australian fixed interest markets, government bond yields dropped, with two-year rates down 0.10% to 4.766% and 10-year rates off by 0.20% to 5.078% at the time of writing.
