ASX 200 set to rise as federal budget approaches
The Australian sharemarket is tipped to start the week in the green as investors await Tuesday’s federal budget with hopes of avoiding the need for tighter monetary policy.
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The Australian sharemarket is tipped to start the week in the green as investors await Tuesday’s federal budget with hopes of avoiding the need for tighter monetary policy.
Futures markets were pricing a 1.4 per cent lift in the benchmark S&P/ASX Index at the close of US trade.
The federal government would best serve investors by keeping spending in check at a time when high inflation was becoming more persistent, EY chief economist Cherelle Murphy said.
“In a capacity-constrained economy, where capital and labour are hard to find, spending that doesn’t have a productivity dividend will make the Reserve Bank’s job harder. That ultimately could mean higher interest rates than otherwise,” she said.
But KPMG senior economist Sarah Hunter said any significant stimulus spending was unlikely to be immediate, given the current position of the economy. “Major spending commitments are likely to be staged over time so they don’t provide immediate stimulus,” she said.
The Australian Bureau of Statistics will release third-quarter inflation figures on Wednesday.
Economists surveyed by Bloomberg expect headline inflation of 7 per cent annually, up from 6.1 per cent in the June quarter, with the trimmed mean lifting to 5.5 per cent, from 4.9 per cent.
On Saturday, Wall Street rose and US Treasury yields paused their climb as The Wall Street Journal reported that Federal Reserve officials were set to raise interest rates by 0.75 percentage points at their November 1-2 meeting but would debate a smaller increase in December.
All three major indexes ended with weekly gains of at least 4.7 per cent, a reprieve after a prolonged period of volatility that has been marked by big swings for stocks and bonds around the globe. The Dow and S&P 500 finished their best weeks since June, while the Nasdaq closed with its best week since July.
The Dow Jones ended Friday up 2.5 per cent, while the S&P 500 jumped 2.4 per cent and the technology-focused Nasdaq Composite rose 2.3 per cent.
Meanwhile, the yield on the 10-year US Treasury note slipped on Friday night but climbed for a 12th consecutive week, notching its largest gains over such a stretch since 1987. The yield on the benchmark note ended the week at 4.212 per cent, near its highest levels of the past decade.
The yield on the two-year Treasury note, which is typically more sensitive to interest-rate expectations, slipped on Friday, ending the week at 4.489 per cent.
Still, the week featured several signs that the US economy is stronger than many feared. Several corporate leaders have expressed confidence that the consumer remains strong.
In Britain markets came under pressure as investors wondered who would become the country’s next prime minister after the resignation of Liz Truss.
Her election and resignation have driven sharp swings in the country’s currency and bonds. The 10-year gilt yield rose to about 4.05 per cent from 3.860 per cent on Thursday night.
Locally the AGM season continues with Rio Tinto, Argo, Tabcorp, Dexus, Woolworths, Whitehaven, Wesfarmers, JB Hi-Fi, Bega, Corporate Travel Management to meet shareholders.
Additional reporting: Dow Jones newswires
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Originally published as ASX 200 set to rise as federal budget approaches