The ASX is higher today on mining and health care gains.
Materials gained 1.35% and Healthcare was 1.01% higher. Energy was the drag, down 0.58%.
At time of writing, iron ore giants BHP (ASX:BHP) Group (up 2.5%) and Rio Tinto (ASX:RIO) (up 0.8%) alongside South32 (up 1.2%) drove the mining sector higher, contributing to a 1.3% sector rise.
Critical minerals and rare earths companies, including Pilbara Minerals (up 0.6%) and Lynas Rare Earths (up 1.4%), also saw gains following the Federal Government's announcement of $7 billion in tax incentives over 11 years from 2023-24 to support the sector.
Healthcare companies, such as Pro Medicus (up 3%) and hearing implant maker Cochlear (up 1.8%), strengthened, lifting the sector by 0.8%. Real estate investment trusts (up 0.9%) also performed well, with Stockland (up 2.2%), GPT GROUP (ASX:GPT) (up 2%) and Scentre (up 1.4%) making gains.
The S&P/ASX200 30.30 points or 0.39% to 7,757.10, crossing above its 50-day moving average. The index has lost 0.61% for the last five days but sits 1.94%below its 52-week high.
Top performing stocks in this index are Neuren Pharmaceuticals and IDP Education Ltd, up 5.35% and 5.29% respectively.
As for the small cap sector, the S&P/ASX Small Ordinaries (XSO) gained 0.016% today to 3,042.60 but is down 0.64% over the last five days.
General budget commentary
There have been mixed reactions to the Federal budget. They range from the harshest of criticism to the average person on the street happy to get anything from the government.
The Australian Shareholders Association gave its run down of the key points, which you can read here.
However, Lightyear Group CEO Michael Jeffriess expressed his concern in no uncertain terms.
"The 2024 Budget is a band-aid solution for a nation facing a financial storm," Jeffriess said. "We're talking about short-term fixes for problems that demand long-term vision and comprehensive planning. Who is going to pay for the four million Baby Boomers who will need aged care over the next 20 years?"
IG Markets analyst Tony Sycamore linked back to interest rates: “As the debate around the Federal Budget’s impact on inflation hots up, it's worth highlighting that the Australian Interest rate market is now pricing in a ~10% chance of a 25bp RBA rate cut at its Board meeting on December 10. while retaining a ~10% chance of a 25bp RBA rate hike by September.
“The key takeaway here is that the rates market appears comfortable that the Federal Budget struck the right balance between providing cost-of-living relief without inflaming inflationary concerns. There is a full 25bp rate cut priced in by next July.
“I expect further adjustments in pricing following this Thursday's labour force report and after the RBA meeting minutes are released next Tuesday.”
CreditorWatch chief economist Anneke Thompson said the budget threads the needle between cost-of-living relief and managing inflation.
“For all the measures announced in Tuesday night’s Federal Budget, the average Australian is likely to focus on one – the $300 energy bill rebate for each household. In conjunction with a boost to Rent Assistance, these are the key pillars of the Government’s attempts to help with ‘cost of living’ pressures.
"The Treasurer is attempting to ‘thread the needle’ here – helping Australians with their bills while not making the shorter-term fight against inflation harder. Of course, we won’t know if the Treasurer will be successful until early 2025, tellingly just before the Federal election which needs to be held by May.
"However, even if these measures do help to bring inflation down to within striking distance of the 2 to 3% target band by the end of 2024, the Reserve Bank of Australia (RBA) is unlikely to view this as enough to start cutting the cash rate. The RBA will look through these short-term impacts, much like they do with volatile items like fuel and fruit and vegetables."
CreditorWatch’s latest B2B Trade Payment Defaults data is at record highs and has been elevated for three straight months, after being on a slow rising trend over 2023. “The budget includes $325 energy bill relief for businesses on smaller electricity plans, as well as extending the $20,000 instant asset write-off scheme.
"These are small measures that will help businesses. But what businesses really need, especially the struggling food and beverage and construction sectors, is more confident consumers, as well home borrowers who can afford to engage builders to build houses.
“Unfortunately, this is unlikely to occur until the RBA begins to reduce the cash rate. Energy relief payments in the pockets of consumers, even in conjunction with already locked in tax cuts from July 2024, are unlikely to convince shoppers to go out and spend again. Inflation is still too far out of the target band, and the last thing the RBA wants is for goods inflation to take off again.
“The RBA will be watching services inflation closely, particularly in health and education, and the budget does little to ease pressures here. There are some savings in the NDIS, but these are offset by forecast additional spending in other areas. It will be a non-budget measure – reigning in population growth – that will have the biggest impact here. And the good news is, the forecasts for population are showing much lower growth over the next few years.
“The Federal Government has a great deal of control here, and has already made it clear that it is reducing student visa numbers dramatically. For mine, this is where the inflation fight will be won or lost, and it appears that we are finally now on the right path.”
Meme stock comeback
GameStop Corporation (NYSE: NYSE:GME) and AMC Entertainment Holdings (NYSE:AMC) experienced a significant rally reminiscent of the social-media-driven frenzy from three years ago.
GameStop's shares surged 60.1%, while AMC's stock increased by 32%. However, both stocks later relinquished a considerable portion of their earlier gains.
But it looks like meme stocks could be making a comeback.
GameStop client trading volumes jumped 3514% as the week began.
“The meme stock trading excitement we saw in 2021 reemerged this week, and some of our Australian traders took advantage of the price action. Webull saw trading volumes from Australian clients increase by over 3,500% in GameStop (GME) on Monday. Phenomena like this don’t tend to exist on the ASX, prompting local clients to seek volatility in other markets, where they can day-trade news events,” Webull Australia CEO Rob Talevski said.
“In this instance, it was an army of traders driving this stock in the US, triggering orders on after a cryptic image was posted online, which led to a 179% two-day jump in the stock by Tuesday's close.”
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