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Australia, NZ: Shares higher as commodities rally overrides election uncertainty
[SYDNEY] Australian shares rose on Monday as surging commodity prices pushed up resource stocks, overriding political uncertainty that stemmed from an inconclusive result in the local general election over the weekend.
After an unusually long eight-week campaign, a general election on Saturday left neither of Australia's two major parties in a position to form a majority government immediately, with commentators suggesting it may take weeks to determine an outcome.
The result was especially unnerving for investors, who remain anxious about their exposure to the United Kingdom's economy after the vote to leave the European Union last month.
After opening lower, the S&P/ASX 200 index recovered ground to be up 10.3 points, or 0.2 per cent at 5,256.9 by 0228 GMT. The benchmark has fluctuated markedly since the June 23 UK "Brexit" vote, and is down nearly one per cent for the year so far.
"The fact that we haven't got a clear result from the federal election, that could be weighing on the banks," said Steven Daghlian, market analyst at Commonwealth Securities.
All four of the major banks, which may face a Royal Commission if the centre-left Labour party wins government, were lower. Commonwealth Bank of Australia, Westpac Banking Corp and National Australia Bank were all down one per cent, while Australia and New Zealand Banking Group fell 0.7 per cent.
Supporting the bourse, however, were miners, which rose after the price of iron ore firmed amid tightening supply in key export market China.
BHP Billiton advanced 1.8 per cent, rival Rio Tinto gained 3.5 per cent and iron ore producer Fortescue Metals Group surged 5.2 per cent.
Gold producer Newcrest Mining jumped 4.6 per cent. The price of gold has been on a tear since Britain's vote to the leave the EU drove up appetite for defensive investments.
New Zealand's benchmark S&P/NZX 50 index rose 13 points, or 0.1 per cent, to 6,935.41, as political instability in Australia and a long weekend in the US kept investors on the sidelines.
The biggest gainers were Heartland Bank, up 2.5 per cent and rubber manufacturer Skellerup, up 1.6 per cent.