Article / 13 May 2015 at 9:00 GMT

Australian Market Wrap: Federal budget a hit

Trading Desk / Saxo Capital Markets
  • Federal budget release boosts Aussie markets
  • Retail surges on new small business benefits
  • AUDUSD sees resistance at 0.80

By Saxo Capital Markets Australia
The Australian market cheered the overnight budget release by the federal government today, shaking off weak leads from offshore stocks.

Led by discretionary spending retailers, the S&P/ASX200 index rose by 40.37 points or 0.71% to 5.715.10.

The index opened quite flat but finished strong, closing near the intraday high 5,715 on the back of retail stocks (which were boosted by the federal government's small business package with its $20,000 instant tax deduction).

Today’s continuation of the rebound is suggesting that positive sentiment is growing along with the budget release. The next resistance level sits at 5,761 while the support level is at 5,671.

Shares in JB Hi-Fi and Harvey Norman (both operate in electronic goods) rallied on the news that products worth up to $20,000 used to run a business – such as cars, fridges, coffee machines, tables and chairs, printers, hot water units, and computers – would see an immediate tax deduction. 

Office supplies
These things add up. Photo: iStock

The ASX 200 consumer discretionary index advanced for a fourth day in its longest streak since January 30.

Supermarket operators Woolworths Ltd and Wesfarmers Ltd lifted 2.63% and 1.49% respectively on slightly higher volume than the previous trading session.

Australia's financials were also rock solid with National Australia Bank bouncing back from its modest losses yesterday to AUD 35.65, up a whopping 3.21% as the market continues to view its shares with positive sentiment following its rights issue. 

ANZ Bank rallied 2.16% to AUD 33.11 and Commonwealth Bank of Australia lifted 1.33% to AUD 83.98. Westpac Bank shed AUD 79 cents after trading ex-dividend for AUD 93 cents to close at AUD 33.27.

Materials were flat: BHP Billiton lost AUD 3 cents to AUD 32.50, Rio Tinto dropped AUD 23 cents or 0.39% to AUD 59.02 and Fortescue Metals lost AUD 0.06 or 2.33% to close at AUD 2.51.

The energy sector continued its march higher as the price of oil strengthened again overnight. Origin Energy closed 1.71% higher to AUD 13.10, Oil Search Ltd dropped AUD 0.02 to AUD 7.71 and both Santos Ltd and Woodside Petroleum added 0.58% for the day. 

Myer was Australia's standout performer today, up an impressive 10.28% to AUD 1.555. Myer’s share price benefited on two fronts today. The first was the publishing of their third-quarter sales. Key financial information included: a 2.4% increase in total sales for Q3 to AUD 661.8 million; Comparable sales were up 1.7% (year-over-year) to AUD 2,425.3m, and four major refurbishments and two new stores contributing to the companies increased sales. 

The second boost to market sentiment on Myer came by means of the federal budget released last night. With the government targeting economic stimulus through small business, a boost in both consumer and business confidence will follow. With the market showing where it considers a rock-bottom share price to be, the veil uncertainty – while not yet lifted – is showing signs of moving in the right direction.

While not in the ASX100, Sirius Resources deserves a special mention after climbing 5.52% to AUD 3.25. Sirius gave an update on its Nova-Bollinger nickel-copper mine which was notably well received. The Nova mine holds world significance for its nickel-copper sulphide resource and has AUD 650m on hand through cash and debt to continue financing exploration, capital expenditure and sales. 

This update will go hand-in-hand with Chinese industrial production data.

Westfield lost 1.81% to close the day at AUD 9.20. Westfield released its shareholder review this afternoon and shares immediately headed south. Key deals from the report include: AUM of AUD 28.5 billion; AUD 11.4bn in development; AUD 17b in annual retail sales; 7,400 retail outlets, and 435m customers visiting 40 of the company malls annually.

The market reaction to last night’s budget has so far been fairly limited. AUDUSD rallied overnight shortly after its release, but couldn’t break through 0.8000. This level, however, was broken today and AUDUSD made an intraday high at 0.8010. 

The wage price index did not have much impact on AUDUSD but soft Chinese industrial production and retails sales figures pushed AUDUSD lower. At the moment, 0.8000 remains as the resistance level and AUDUSD is expected to show weakness unless we see a clear breakout above 0.8026 which would confirm further upside momentum.

— Edited by Michael McKenna

Australian Market Wrap is compiled by the Sydney trading desk at Saxo Capital Markets


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail