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Australian dollar weakens ahead of federal budget

Canberra

The S&P/ASX 200 climbed through the morning session to be up as much as 0.9% at one stage to an intraday high of 7480.90, and closed up 0.7% at 7464.30 on Tuesday. The Australian dollar, has dropped below US75c, weakening to US74.83c. Bitcoin is holding above US$47,000, while spot gold is consolidating support around the US$1920 an ounce level, and crude oil has steadied after dropping overnight.

Energy and Materials stocks weighed on the index while the Information Technology sector gained.

The S&P/NZX 50 was up just 10 points at the close.

Retail sales

Australian retail turnover rose 1.8% in February 2022, seasonally adjusted, according to the Retail Trade figures released on Tuesday by the Australian Bureau of Statistics (ABS). The February result follows a 1.6% rise in January 2022*, a fall of 4.1% in December 2021*, and a rise of 7.1% in November 2021* (*revised data).

February’s result saw retail sales reach their second highest level on record after November 2021.

Cafes, restaurants and takeaways had the largest rise, up 9.7%. Food retailing had the largest industry fall, down 2.6% and the other industry to fall was other retailing, down 1.1%.

Energy stocks

Santos and Woodside Petroleum are expected to more than double profits this year, according to upgraded forecasts from UBS. The move comes on the back of a rally in energy commodities that is likely to benefit Australia’s two listed energy giants. The forecasts from UBS are a 33% jump on prior estimates for Santos, and 49% higher for Woodside.

Santos is the preferred locally listed energy pick for UBS, which anticipates uplift in the share price as the company sells down stakes in operations from Alaska to Papua New Guinea, improving its balance sheet.

Australian budget

Treasurer Josh Frydenberg will announce Australia’s federal budget on Tuesday night, with expectations that it will be a launch pad for a May election. Fuel excise will be cut temporarily to combat rising fuel prices and inflation. Consumer and infrastructure-related stocks are likely to be in focus with billions to be put towards new and existing projects and moves to address wages growth and to rebuild travel and tourism interest after border closures and covid restrictions.

Stocks to watch ahead of the Australian budget: Bloomberg

Asia markets are mixed and US stock futures are flat. By the close on Monday, the Dow Jones Industrial Average rose 94.65 points or 0.27%, the S&P 500 climbed 0.7%, while the Nasdaq Composite gained 1.31%.

AUD/USD US74.83c

WTI currently US$105.89 a barrel

Brent crude oil US$111.36 a barrel

Spot gold US$1922.48 an ounce

Bitcoin US$47,552


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