Australian Budget Estimates 2.75% Growth Rate and Iron Ore Price at $48

Marcus Jacob
12 May, 2015
New York City

Australian federal budget offered incentives for small businesses and capital investments and softened unemployment burden for youth. In cautious approach, the government estimated annual iron ore price at $48 a ton and coal price at $90 a ton. Qantas surged after reporting a drop in fuel costs.

[R]5:30 PM Sydney – Australian federal budget offered incentives for small businesses and capital investments and softened unemployment burden for youth. In cautious approach, the government estimated annual iron ore price at $48 a ton and coal price at $90 a ton. Qantas surged after reporting a drop in fuel costs.[/R]

Federal Budget released by Treasurer Joe Hockey offered incentives for small businesses, infrastructure investment incentives and took a cautious approach to iron ore and coal export prices.

The budget widely perceived as family and small business friendly still requires a passage in the parliament and the government revenues were based on $48 a ton price for iron ore and $90 a ton price coking coal.

The government estimated federal revenues on 2.75% economic growth in the fiscal year and higher growth in the following years.

Australian market indexes trade higher and the Aussie dollar held firm above 79 U.S. cents.

Iron ore and commodities prices gained after China lowered rate for the third time in six months.

Australian dollar closed at 79.27 U.S. cents and in stock trading turnover climbed to 995 million shares worth $6.7 billion.

At close, the ASX 200 Index gained 49.50 or 0.9% to 5,674.70 and the broader All Ordinaries Index increased 45.50 to 5,673.10.

In commodities trading, gold dropped US$6 to US$1,183 an ounce and Brent crude rose 0.27 cents to close at US$65.18 a barrel.

Australian Stock Movers

CSR Limited surged 7.7% to $4.04 after the building products maker reported revenues in the year ending in March soared 16% to $2.02 billion from $1.75 billion in a year ago period.

Net profit in the year surged 42.4% to $125.5 million compared to $88.1 million and diluted earnings per share jumped to 24.9 cents from 17.5 cents in the same period a year ago.

GUD Holdings Limited closed unchanged at $7.59 after the appliance manufacturer agreed to acquire asset worth $200 million from Brown & Watson International Pty Ltd at a base price of $7 a share and pay for the transaction through an offering of $89.5 million.

Orica Limited climbed 3.5% to $20.89 after the blasting products and services provider said revenues in the second-half period ending in March were nearly flat at $2.81 billion form a year ago period.

Net profit in the year declined 10% to $229.4 million compared to $254.8 million and diluted earnings per share slipped to 59.9 cents from 65.9 cents in the same period a year ago.

The company blamed profit decline to softness in the mining sector.

Qantas Airways Limited climbed 7.2% to $3.56 after the state controlled airline said fuel costs in the current fiscal year is expected to decline $550 million and the company is set to lower its operating costs by $875 million in total.

The company also said it plans to repay $1 billion in debt and the airline is expected to report underlying profit of $900 million and revive dividend.

The company forecasted fuel bill in fiscal 2015 at current price to range between $3.92 billion and $3.95 billion and $3.87 billion in 2016.

Fuel bill in 2014 was $4.5 billion.