Did somebody say tax cuts?! Earlier this week, the NSW government has announced big slashes to land tax as part of the state-wide coronavirus recovery plan. In reflection of the recent investment hesitation that still remains rampant, State Treasurer Dominic Perrottet announced that the government will tender a 50 per cent cutback in land tax to large property developers who meet the criteria. The government also announced the “fast-tracking” of approvals for local infrastructure and developments, which will hopefully provide enough concession to stimulate the property investment arena.
Budgeting, budgeting, budgeting…Australians aren’t the only ones who have been revising their financial saving strategies. The Federal government have been left pulling their hair after announcing a record blowout in the budget deficit. However, Phillip Lowe of the RBA and economists alike have sought to alleviate the trepidation, re-affirming that these levels of public debt are entirely “manageable” and “affordable”. Dr Shane Oliver from AMP Capital explains that trying to survive as a buoyant nation in these “extraordinary times” justifies the steep increase in government spending which supports vulnerable businesses and individuals.
Furthermore, in an update from last week, the Federal Government has announced that national interest may dictate that a further $22 billion be spent to mitigate the foreshadowed financial precipice as September draws near. Ultimately, we are reminded that our nation’s relative proportion of financial deficit to economic size continues to dawdle in the shadows of US and European economies. Arguably, this provides us with more lee-way to inject financial security into the community during these ‘unprecedented times’.
Now we turn to the share market for this week, which in the words of the great poet T.S Eliot, ended ‘not with a bang but a whimper’. Friday experienced a $36 billion fall in the market cap after the ASX 200 lost 2 per cent to close at 5927.8. The big banks experienced big losses this week with Westpac leading with a 3.3 per cent fall to $17.09 and ANZ and NAB both losing between 2.2 and 2.8 per cent. Local energy stocks, health stocks and mining stocks all experienced hits with sectors down from up to 3 per cent.
“Yes, we saw the US economy contracting… and grabbing all the headlines, but what I think investors are focusing on is the virus resurgence and how that is playing into the trajectory of the recovery”
This rounds up the overall pessimism felt on the market with a 1.6% weekly loss, reflecting the souring US GDP data amidst rising coronavirus numbers. This comes as our American counterparts over the ocean continue to labour under extended job cuts and investment anxiety as a result of the sharp 33% fall in second quarter GDP. Holistically, this represents the deepest decrease in output in the history of the US economy, almost tripling the previous record set in 1958. Overall, we will have to stay tuned to see whether the US can clamber out of another economic contraction or spiral deeper into recession.