Budget deficit a possibility, super funds keep losing, oil at 16 month low: Economy roundup

Fears that the market would chase Wall Street down have been alleviated this morning as the market dipped before recovering. While the market fell close to 3760 points at 11.30am AEST, it recovered to 3844.1 points at 12.34pm.

Fears that the market would chase Wall Street down have been alleviated this morning as the market dipped before recovering. While the market fell close to 3760 points at 11.30am AEST, it recovered to 3844.1 points at 12.34pm.

The Reserve Bank also stepped in to support the Aussie dollar in Europe last week, an intervention the bank said would “add liquidity in an illiquid market”.

The last time the RBA intervened was in mid 2007, during the first symptoms of the credit crisis.

Finance Minister Lindsay Tanner also warned yesterday that the budget might go into deficit. He says the Government is aiming for a surplus in next year’s budget, but is unwilling to make any guarantees.

“It is really difficult to have any clear picture of what the second half of next year or the following year is going to look like when you’ve got such extraordinary circumstances internationally,” Tanner said yesterday on Meet the Press.

While the Government has slashed this year’s $21.7 billion surplus to $12.8 billion due to its stimulus package, it is predicting a $19.7 billion surplus for 2009-10.

The economic woes continue, with research from SuperRatings.com.au showing Australia’s super funds experienced a fourth consecutive quarterly loss ending 30 September. The median balanced investment lost 3.4% over the quarter, which the company expects to worsen by the end of October.

“Australian super funds are facing their biggest challenge since the introduction of compulsory superannuation in 1992 due to the fallout of the international financial crisis affecting nearly all institutions,” Jeff Bresnahan, managing director of SuperRatings says.

Meanwhile, oil has reached a 16-month low despite OPEC cutting production for November, with Macquarie Futures US vice president Nauman Barakat saying the price is slipping towards $US50 a barrel.

“OPEC really needed to take the bull by the horns and make a bigger cut,” he says.

The Aussie dollar is also on a decline, hitting a five-year low at US61.33 cents early this morning after ending trading on Friday at US65.10 cents. The dollar was trading at US62.01 cents at noon AEST.

 

Trending

COMMENTS

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments