Aust stocks close slightly higher

Local market pares early gains after federal budget deficit widens as expected.

The Australian stock market has pared morning gains to close slightly higher after the federal budget deficit increased and the Reserve Bank of Australia again warned the exchange rate was too high.

At the 1615 AEDT official market close, the benchmark S&P/ASX200 index was 0.27% higher at 5,103.2 points, while the broader All Ordinaries index rose 0.26%, at 5,106.1 points.

Australia's federal deficit is forecast to be $47 billion in fiscal 2014 and the budget is not expected to return to surplus before fiscal 2017, Treasurer Joe Hockey announced in the Mid-Year Economic and Fiscal Outlook today.

IG analyst Chris Weston noted that the deficit over the four-year forward estimates is expected to total $122.7 billion.

"[This] is in line with prior warnings that were well telegraphed in the local press," Mr Weston said.

"Ultimately its politics which loses from this, with both political parties shouldering the blame for Australia’s deteriorating economic fundamentals."

Meanwhile, the RBA repeated concerns about the "uncomfortably high" Australian dollar, even though the currency had "depreciated noticeably".

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles