Markets Cautious as Government Introduces New Budget

Submitted by Craig Strzelecki on 12 May, 2008 - 13:16

Investors and share traders at the Australian stock exchange are cautious before the introduction of new budget to be introduced on Tuesday. Traders also fear yet another surge in crude oil prices and problems in the financial markets. Thus, they would be more focussed towards the domestic events in coming few days.

The futures market is also expected to open at least 11 points lower than the previous close. Uncertainty has kept the traders wary of the market movements. The commodity prices of oil, gold and base metals are also expected to remain strong which means that the markets may remain down by 10 to 20 points.

Investors are also waiting for the measures that are likely to be introduced into transport sector and infrastructure. They are expecting that there might be some surprises, thus are waiting for the new budget before making any further serious investments.

The new Rudd government shall unveil its first federal budget on Tuesday. The Australian share market is already playing it safe before the budget announcements. Prime Minister Rudd’s tax review shall involve federal, state and local taxes.

The Australian government shall review the entire tax system of the country. Country’s business leaders have already welcomed the move of Treasurer Wayne Swan to completely review the Australian taxation system.

According to Swan, it is time to make a deeper inquiry into the state, federal and local taxes in the country. He said that the tax system needs to be more efficient and should be essentially internationally competitive.

The government has already announced that the new budget shall include 70 percent increase in tax on ready-to-drink alcoholic beverages, luxury cars and shall lift the threshold for Medicare levy surcharge. However, the GST would remain untouched at 10 percent neither will it be expanded to exempt items such as fresh foods. As the Australian economy is growing robust each day, Australian investors have a better vision of analysing the outcomes of the budget and predict market movements.