Australia Faces Rising Budget Deficit and Slowing Economy

Marcus Jacob
15 Dec, 2014
New York City

Australian stocks traded lower and the Aussie declined after the mid-year review of federal government budget showed a slowdown in revenues and deficit to surge to $40 billion. Recall Holdings rejected takeover offer.

[R]5:30 PM Sydney – Australian stocks traded lower and the Aussie declined after the mid-year review of federal government budget showed a slowdown in revenues and deficit to surge to $40 billion. Recall Holdings rejected takeover offer.[/R]

Stocks in Australia traded lower after the release of federal government mid-year review.

The federal government’s mid-year review showed a marked deterioration in revenues and also budget deficit is estimated to soar to $40 billion from the previous estimate of $29.8 billion.

The sharp fall in revenues from the exports of commodities and energy affected the estimated revenues. The government also estimated inflation to rise to 2.5%, jobless rate is estimated to increase to 6.5% and GDP growth will remain flat.

The Australian Bureau of Statistics said seasonally adjusted new motor vehicle sales in November slipped 0.6% followed by 1.6% decline in October.

On a yearly basis, new motor vehicle sales in the month slumped 3.8% after easing 0.5% in the previous month.

Australian dollar closed at 82.39 U.S. cents and in stock-trading turnover declined to 658 million shares worth $3.6 billion.

ASX 200 Index slipped 33.50 or 0.6% to 5,186.10 and broader All Ordinaries Index fell 32.30 to 5,164.60.

In commodities trading, gold slid US$3 to US$1,217 an ounce and light crude oil dropped $2.11 to US$58.08 a barrel.

Australian Stock Movers

Ausdrill Limited closed unchanged at 39.5 cents after the mining and energy service provider secured debt refinancing facilities worth $125 million maturing in March 2018 and also securing a new dual currency debt facility.

Recall Holdings Ltd surged 15.3% to $7.38 after the information technology company rejected a $2.19 billion or $7 cash a share takeover offer.

The company rejected the offer with 9.4% premium from the U.S. based data storage and information management company Iron Mountain Inc. and said in a regulatory statement that offer “materially undervalues” the company.

The company was spun-off from Brambles Ltd. in December 2013.

Telstra Corporation Ltd gained 0.7% to $5.74 after the telecommunication service provider signed and revised $11 billion agreement with NBN Co and the Federal Government to transfer ownership of its hybrid fiber-coaxial networks to the broadband provider.