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S&P/ASX 200 to rise – winners & losers from the Federal Budget

The S&P/ASX 200 (ASX: XJO) is tipped to rise at the open on Thursday according to the Sydney Futures Exchange. Here’s your daily ASX morning report.

ASX budget bounce, a long list of winners

The ASX 200 overcame a weak lead from the US to deliver its strongest budget bounce since 2002, jumping 1.3% on Wednesday. It will likely take several weeks to digest the true implications of this budget, particularly those sectors that missed out. But on Wednesday, it was all about the consumer, property and banking sectors.

Both the discretionary and staples sectors rallied 2.2%, with furniture retailer Temple & Webster Group Ltd (ASX: TPW) and Woolworths Group Ltd (ASX: WOW) identified as key beneficiaries, adding 9.5% and 2.0% respectively.

Initial estimates suggest that the announced tax cuts will add $6.9 billion to disposable incomes in 2021. It’s yet to be seen whether consumers will have the confidence to spend this or will increase savings in line with the post-GFC experience.

The ASX banking sector benefitted from the jobs-focused budget and hopes that the Victorian economy may be returning to normal, with Australia and New Zealand Banking Group Ltd (ASX: ANZ) leading the way, up 2.4%.

The other clear beneficiary has been trade and construction exposed businesses, or those with substantial capital requirements. Recycling and waste management group Cleanaway Waste Management Ltd (ASX: CWY) rallied 4.8% on hopes of a boost to residential construction and SEEK Limited (ASX: SEK) added 4.2% as job advertisements are expected to rise following the $200 per week trade credit announced.

In my view, the budget was good news for an economy that needs a real injection, but lacked the real innovation and leadership required to push the Australian economy into the future.

Featured video: ASX small-cap chat with Andrew Page

The biggest losers

Whilst there were plenty of winners from the budget, there are a number of clear losers, with the travel and leisure sector offered little in the way of support. As highlighted on Tuesday night’s coverage, there is little value in tax write-offs if you don’t have any revenue.

The Qantas Airways Limited (ASX: QAN) share price fell 0.6% on the news, whilst Flight Centre Travel Group Ltd (ASX: FLT) shares remain under pressure, falling 0.7% despite hopes of intra-Australian travel returning sooner rather than later.

I’m not confident enough is being done to boost those businesses that have been devastated by the lockdowns, particularly smaller retailers, restaurants and tourism providers; nor that the changes will be sufficient to offset the expected reduction in immigration in the years ahead. Only time will tell.

The tweets continue, spotlight on Ant Financial

President Trump got straight back to work, unleashing a series of tweets around one-off stimulus payments. He flagged support for the beleaguered airline sector and another one-off stimulus cheque, that he would sign off personally.

The result was a risk-on mood, the S&P 500 finishing 1.7% higher and the Nasdaq 1.9%, near one-month highs. Just 51 companies fell on the S&P 500, with the pressure focused on real estate and energy utilities.

The White House has also ramped up pressure on the impending IPO of mega fintech Ant Financial, owned by Alibaba Inc. (NYSE: BABA), indicating it has been seeking options to restrict the sharing of payment information, similar to its restrictions on We Chat, owned by Tencent. The difficulty remains in working out how this is possible and legal, hence both share prices headed higher, by 2.9% and 1.4% respectively.

Meanwhile, Levi Strauss (NYSE: LEVI) delivered an earnings update, highlighting its strong online growth, 50% for the quarter, as consumers seem to be pivoting from activewear to casual wear.

This article was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. To get in contact with Drew, click here to visit the Wattle Partners website.

The Golden Rules of Investing

We might be experts in retirement, but with combined financial advice experience of 35+ years, we’ve nearly seen it all. 

In mid-2023, our senior team at Wattle Partners Financial Planning put the finishing touches on a brand-new report “The Golden Rules of Investing“.

In this free report, we outline the key principles that determine all of the portfolio construction and investment decisions of Wattle Partners. Collated over decades, this paper should be seen as a work-in-progress, constantly under review in light of the ever-evolving nature of markets. 

You’ll find the free report on my Author page. Simply click the button below to view the Golden Rules.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.


Disclosure: At the time of publishing, Drew owns shares of Cleanaway and Alibaba.

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Wattle Partners is a financial advice firm, servicing clients around Australia, specialising in retirement planning (pre and post retirement). 

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