5:00 PM Sydney – Australian government focused on increasing taxes, cutting spending and repaying debt in the latest federal government budget. Stock market indexes closed nearly unchanged. A private measure of consumer confidence index declined to the lowest in six years.
Investors focused on the latest federal government budget and market indexes closed nearly unchanged.
Australian Budget Targets Debt
Treasurer Joe Hockey focused his efforts in eliminating the entire federal government debt in a decade and announced cuts in welfare spending, pensions and raised prices for fuel and medical services.
The federal government debt is estimated to peak at $264 billion in fiscal 2017 and Treasurer Hockey estimated by 2025 the government will be debt free.
Hockey also announced its plan to issue $63 billion in new Australian government bonds of which $27 billion will be used to repay maturing debt. Additional, $4 billion inflation-linked bonds will be issued in the fiscal year 2014-2015.
After the budget, all eyes were on the interest rate and rates are expected to rise from the current low of 2.5%, held since August of last year.
In the current year, the federal government issued $80 billion of bonds and additional $5 billion inflation linked bonds of which $23 billion was used to repay maturing debt.
The current budget estimates unemployment rate of 6.25%, economic growth of 2.5% and budget deficit of $29.8 billion in the period 2014-2015.
Australian dollar closed higher at 94.01 U.S. cents and stock market trading turnover declined to 624 million shares worth $4.16 billion.
The ASX 200 index slid 1.70 to 5,496.50 and the broader All Ordinaries edged up 0.50 to 5,475.90.
Stocks in Review
Rio Tinto fell 7 cents to $62.78. BHP rose 34 cents to $38.30. Woodside Petroleum Limited added 0.9% to $41.70.
Westpac Banking Corp slid 4 cents to $34.20.
Commonwealth Bank of Australia
gained 1.2% to $80.89 after the banking services provider said cash earnings in the third-quarter ending in March climbed 16% to $2.2 billion compared to $1.9 billion a year ago period.
In the quarter, the bank has kept aside $204 million for bad debts compared to $255 million a year ago.
declined 4.8% to $3.34 after the building products maker reported revenue in the year ending in March jumped 4% to $1.75 billion from a year ago.
Net in the year swung to a profit of $88.1 million compared to a net loss of $150 million and earnings per share increased to 14.2 cents from 5.8 cents a year earlier.
Telstra Corporation Ltd
gained 0.6% to $5.28 after the communications and information services provider had completed the sale of its 76.4% stake in Hong Kong-based mobile business CSL to HKT Limited, for a profit of $561 million for its stake of $1.99 billion.