The growing disparity in market capitalisation between BHP and Commonwealth Bank accelerated following Tuesday night’s budget with some analysts now forecasting an end to the 30-year housing cycle. Changes to capital gains tax and negative gearing make the banking and housing sectors less attractive to invest in and that has implications for other assets classes like share and bonds.

The shift in sentiment was reflected in the big bank share prices yesterday. All were lower, led by the country’s biggest housing lender, Commonwealth Bank.

This is happening as the price of copper rallies to an all-time high, pushing beyond $US14,000 per tonne, helping BHP hit another record yesterday. It is now 20 per cent larger than CBA.

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Greed-o-meter

Some of the main 2026 budget spending initiatives:

Source:Westpac, Federal Treasury

Fear & Greed Q+A today

On Employment Hero's startup success story, and how AI is changing not just his business model, but the future of work:

 

"I think we’re at a point now where, because of AI and the ability to do all parts of employment, employment can actually become something you just plug into.

 

The right skills in the right quantity are delivered to your business for you to direct. You choose who you hire and how they’re managed, but we become the employer of record and handle all of that back office for you.

 

That’s the big unlock AI has given us — the ability to deliver employment almost as infrastructure. It’s similar to what happened with electricity or cloud computing. Businesses used to run their own power or their own servers, and now they plug into centralised systems. I think employment is moving in the same direction."

News in brief

Opposition leader Angus Taylor says the Coalition will fight tooth and nail to oppose the government’s changes to the capital gains tax and negative gearing announced as part of Tuesday’s budget.

Commonwealth Bank reported a $2.7 billion cash profit for the March quarter, an underwhelming result which, combined with the federal budget changes, pushed its share price down a whopping 10 per cent. That is worth around $30 billion.

The pace of wage increases has slowed, slightly, to 3.3 per cent per year, about the same level as most of the past 12 months. Public sector wage growth, after some big increases last year, is slowing, while private sector compensation is steady.

Accent Group, the name behind Hype and The Athlete’s Foot shoe chains, will cut jobs and roll out its Sports Direct brand, to boost sales. Sports Direct is a major British big box retailer that will compete with Rebel Sport.

A painting stolen by Nazis from a Jewish art collector in the Netherlands during World War Two has been found in the home of descendants of a notorious Dutch SS collaborator.

Fear-o-meter

Jason Todd, CIO, Ten Cap on the federal budget and markets

"The only thing 'Big and Bold' about this budget was in the description. It was neither big nor bold. It did nothing to boost productivity that has been languishing for a decade, it did nothing to help bring inflation down – the primary ill of the economy – and it did nothing to boost the growth outlook…

"Between the Government and the RBA, they hold the tools to boost productivity, reduce inflation, and grow the economy. The question is whether they are using these tools and whether one arm is working with the other arm. The budget showed that the two arms are not working in tandem.

"The equity market will not move sustainably and meaningfully higher unless you can bring inflation down and that requires tighter policy and a slowdown in aggregate demand. Everything else is a just a sideshow with some stocks and sectors receiving small tailwinds and others small headwinds.

"Will the budget drive business investment? Unlikely. Will the budget help lower inflation? Unlikely. Will the budget allow corporates to increase profit margins or profit share? Unlikely. That combination alone means it's not a market friendly budget, but budgets never are, and we were looking for the budget to help the RBA's objective not harm it."

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