The Australian share market has finished slightly higher as defensive stocks performed well after the release of the government’s budget update.
Bell Direct equities analyst Julia Lee said investors sold off banking, materials and energy stocks as the government raised the possibility of potential tax hikes next year.
“The Australian market gave up just about all of its earlier gains,” Ms Lee said.
“Today’s budget update suggests in May we’ll be watching to see whether we do see steep spending cuts and potential higher taxes.”
The 2013/14 federal budget deficit has risen to $47 billion, from a $30 billion deficit forecast just before the September election, according to the Mid Year Economic and Fiscal Outlook (MYEFO).
Defensive stocks did well, with the telcos, consumer staples and health care stocks finishing in positive territory.
It came after US and European stocks received a boost overnight from stronger US industrial output figures.
Investors will be watching the Federal Open Market Committee meeting to see if the Fed will begin to taper its stimulus program.
Among the big four banks, Westpac had gained 10 cents to $31.87, ANZ put on 19 cents to $30.48, National Australia Bank increased 20 cents to $33.40 and Commonwealth Bank was up 30 cents to $73.93.
In the resources sector, global miner BHP Billiton was flat at $35.66, Rio Tinto was up 39 cents to $65.30 and Fortescue Metals had lifted 17 cents to $5.52.
Telstra shares were four cents higher at $5.02 while Wesfarmers shares were $1.05 higher at $42.56.
Shares in REA Group dropped $2.79, or 6.9 per cent, after the online real estate advertising business announced its chief executive, Greg Ellis, would leave the company to take up an overseas appointment.
KEY FACTS
* At the close on Tuesday, the benchmark S&P/ASX200 index was 13.6 points, or 0.27 per cent, higher at 5,103.2.
* The broader All Ordinaries index was up 13.0 points, or 0.26 per cent, at 5,106.1.
* The December share price index futures contract was flat at 5,101, with 108,978 contracts traded.
* National turnover was 1.4 billion securities worth $3.7 billion.
