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Australia: Shares rally on surprise conservative election win
[SYDNEY] Australian banking, property and health-related stocks pushed the sharemarket to an 11-year high on Monday as investors cheered the conservative coalition parties' surprise election victory on the weekend.
The benchmark S&P/ASX 200 index was up 1.7 per cent at 6,464.00 points at the open, hitting its highest intraday level since 2007.
Shares of the country's biggest lender, Commonwealth Bank of Australia, No. 2 rival Westpac Banking Corp, market No. 3 Australia and New Zealand Banking Group Ltd and the fourth-largest lender, National Australia Bank Ltd, jumped between 6 per cent and 8 per cent .
"The uncertainty has been removed," said Jason Beddow, chief executive officer of A$5.3illion (S$5.04 billion) fund manager Argo Investments Ltd.
"For about a year we've been talking about all these Labor policies and looking at the polls thinking they're going to get in. And in 24 hours all the things everyone's been talking about for a year just don't really matter, which is extraordinary."
With just over two-thirds of votes counted, the Australian Electoral Commission (AEC) said Prime Minister Scott Morrison's coalition has won 75 seats in Australia's parliament, one seat short of a 76-seat majority.
Most major opinion polls had pointed to a victory for the centre-left Labor party. Labor had campaigned on a policy of closing some tax loopholes for owners of investment properties, which had economists anticipating downward pressure on house prices already in decline.
Shares of property classifieds company REA Group were up 7 per cent and shares of rival Domain Holdings Australia were up 3 per cent in early trading.
Private health insurance stocks meanwhile rose sharply. Labor had campaigned on promises to curb annual rises in private health insurance premiums.
Shares of the country's biggest private health insurer Medibank Private were up 10 per cent , while smaller NIB Holdings was up 9 per cent in morning trading.
The Australian dollar also got a lift, bouncing to A$0.6904 from a four-month trough of A$0.6865.
Yet markets are still convinced the Reserve Bank of Australia (RBA) will have to cut interest rates in the next few months, given protracted weakness in inflation and wages and a recent uptick in the unemployment rate.
The futures market implies a 62 per cent chance of a quarter point cut in the 1.5 per cent cash rate when the RBA board next meets on June 4. A move is almost fully priced for July and a further cut to 1 per cent is baked in by December.
Coal companies Whitehaven Coal and New Hope Corp were up 2 per cent and 4 per cent respectively as climate change activists failed to sway the polls as much as expected. Morrison, a coal promoter, won in part due to strong opposition to Labor in the coal mining heartland of Queensland state.