Which ASX shares could be set to benefit from the federal budget?

These ASX shares might be the winners of the recent budget.

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Well, last night was one of the biggest nights of the year on both the political and economic calendars – Federal Budget night. It's the night when the Treasurer tells us what the government intends to collect in terms of taxes. And where it intends to spend this money in government expenditure.

In other words, it's a list of both economic winners and losers thanks to government intervention in the economy for the next financial year.

Last night was the Labor Party's second budget since coming to power in the 2022 Federal election. It was also the second surplus the government has posted in as many years. This one represents a $9.3 billion difference between what the government takes out of the economy and what it puts back in expected over the coming financial year.

Since the budget is such a huge part of the economy, it can have significant impacts on the share market. Not to mention on individual ASX shares. So today, let's discuss which ASX shares are set to benefit the most from what was announced last night.

First up, the budget implements the revamped 'stage three' tax cuts that have been on the cards for a while now. This will result in every Australian income taxpayer receiving a tax cut beginning on 1 July. In addition, every household in the country will also be eligible for a $300 energy bill rebate.

Which ASX shares are winners from last night's federal budget?

For one, this will probably benefit energy generators and retailers like AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG). That's because consumers arguably won't feel the full brunt of their energy use over the 12 months from 1 July.

But more money in pockets from both the tax cuts and the energy rebates will probably disproportionately flow through to consumer discretionary shares. Those might include Harvey Norman Holdings Ltd (ASX: HVN), JB Hi-Fi Ltd (ASX: JBH), Premier Investments Limited (ASX: PMV) and Super Retail Group Ltd (ASX: SUL).

But perhaps the centrepiece of last night's Budget was the 'Future Made in Australia' policy. According to AMP economist Shane Oliver, this $22.7 billion program consists of a package of measures. These include tax breaks, loans, subsidies and cuts to red tape to facilitate additional investment in Australian critical mineral production and processing.

These critical minerals are all commodities needed for future-facing technologies like green hydrogen, renewable energy generation and rechargeable battery manufacturing. They include lithium, cobalt, rare earths, nickel and vanadium.

Most ASX shares that are involved in the mining, production or processing of one or more of these 'critical' commodities stand to be potentially massive winners from last night's budget.

That's probably why we saw big share price gains for the likes of Arcadium Lithium plc (ASX: LTM), Lynas Rare Earths Ltd (ASX: LYC) and Fortescue Ltd (ASX: FMG) today.

Foolish takeaway

So these are just some of the shares that might benefit the most from last night's budget. We saw a notable market reaction for many of these shares today in response, but only time will tell exactly how much these shares will tangibly benefit from what was announced by the government last night.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Harvey Norman and Super Retail Group. The Motley Fool Australia has recommended Jb Hi-Fi and Premier Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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