Australian shares gave up early gains to hit a 2-1/2-year low led by a late sell-off in banks and resources shares after the government forecast its budget deficit would swell to A$37.4 billion ($27.1 billion) in the year to June. The deficit for 2015/16 had been forecast at A$35.1 billion in the May budget but falling prices for key resource exports opened a gaping hole in tax revenue.
The S&P/ASX 200 index fell for a sixth consecutive session on Tuesday, down 19 points at 4,909.60, a level last seen in June 2013. In early trades, the index rose 0.8 percent to an intra-day high of 4,969.40. It skidded 2 percent on Monday. Earlier, minutes of the Reserve Bank of Australia's (RBA) December policy meeting reaffirmed the outlook for steady interest rates in the near term. New Zealand's benchmark NZX 50 index ended up 0.09 percent, or 5.30 points, to finish the session at 6,040.55.
Despite Tuesday's gains, the index traded near 3-month lows, below the crucial 5,000 level. It has declined in eight of the last nine sessions - a feat repeated only once this year and three times in the past four years, noted IG market analyst Evan Lucas. "There are signs that the ASX is coming to the critical point where sustained selling will be questioned," Lucas said in a note.
Later in the session, the Australian government will release its latest budget update or Mid-Year Economic and Fiscal Outlook (MYEFO), which is likely to see deficits revised up as falling commodity prices erode revenues. Minutes of the Reserve Bank of Australia's (RBA) December policy meeting reaffirmed the outlook for steady interest rates in the near term.
Comments
Comments are closed.