Budget 2009: Recession exit strategy "Part 2"

9. Implications – shares, rates
The Reserve Bank is likely to remain on the interest rate sidelines for the next few months. Budget measures such as tax cuts, the lift to pensions and increased spending on infrastructure will support the economy over the coming year. And the Reserve Bank has already highlighted the “substantial” stimulus applied to the economy from rate cuts and fiscal (budget) measures.
The budget is very much pro-growth. Overall the measures should support confidence, spending and profitability and give Australia the best chance of being the first developed economy out of the global recession.
Increased infrastructure spending will support prospects of companies in the Industrials sector, especially construction, engineering and transport firms.
Changes to the private health insurance policies are mixed for the healthcare sector. The increase in the Medicare levy surcharge for higher income earners will “encourage’ them to take out private health insurance. But the reduction of the Private Health Insurance rebate for high income earners acts as a disincentive to stay in private cover.
Some manufacturing businesses, retailers and industrial companies will benefit from the increase in the small business tax rebate.

Source Craig James, Chief Equities Economist, CommSec