Budget will have little impact
Last night’s budget announcement will have minimal effect on financial markets, according to financial services industry sentiment.
Industry reaction today reflected that market expectation matched budget policies, not least because many had been previously announced.
AMP senior Australian economist Simon Doyle says the budget has not introduced anything too dramatic for the share markets.
"Changes that would affect the Australian share market, cuts to company tax and stamp duty on share transactions, have been known for some time," he says.
Looking at the Australian bonds market, Doyle says the government forecast is fairly optimistic and again there is little new information to cause a change of view.
"We expected some new spending, and got it. We expected a small surplus, and got it. The budget is slighty optimistic, but not outlandish," Doyle says.
Addressing the Financial Planning Assocation's (FPA) budget breakfast, HSBC chief economist John Edwards described the budget as a highly political document in light of the imminent election.
"The budget is designed to win back agreed constituencies for the coalition."
"It has had no impact at all on the financial markets, they [the markets] are comfortable with the numbers in the budget," Edwards says.
He believes the $1.1 billion forecasted surplus for the 2002/2003 Budget is too fragile to bear the weight of any further major tax cuts.
"The budget is the government's election campaign. They can no longer announce further tax cuts," he says.
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