Aussie shares are improving for a fourth day following the surprise Coalition victory, with the ASX 200 lifting by 1.4 per cent on Monday and hitting 11.5 year highs in the process.
Markets have more often than not received a temporary boost post-election regardless of which party has come out on top. The Coalition victory however was a surprise to the market and means it is business as usual for now. Investors had been taking into account Labor’s proposed reforms to negative gearing, franking credits and Capital Gains Tax. The strongest improvers are stocks with a link to housing market and banks.
The big banks are surging by as much as 7.6 per cent and are accounting for around three quarters of the market’s improvements. Building products makers Boral (BLD) and Adelaide Brighton (ABC) are also firmer while retailers like Harvey Norman (HVN) and Adairs (ADH) are lifting.
Health insurers Medibank (MPL) and NIB (NHF) are surging by as much as 10 per cent as Labor had plans to cap premium increases in the sector.
Iron ore miner Fortescue Metals (FMG) is up 2.6 per cent thanks to a strong lift in the iron ore price to a five-year high on Friday. The metal has surged by 2.4 per cent or $2.40 to US$100.40/t mainly on concerns of lower supply. There have been disruptions at major iron ore mines in Brazil this year while Cyclone Veronica slowed activity in WA in March.
Scentre Group (SCG) is a touch lower at lunch. The operator of Westfield shopping centres in Australia has announced that Perron Group will pay $575m to be a new 50 per cent joint venture partner in Westfield Burwood, Sydney. This is one of the most visited shopping centres in Australia with more than 14 million annual visitors. SCG intends to initially use funds to help pay down debt.
The Reserve Bank will be in focus this week, with the RBA Board minutes and a key speech by the bank’s governor both due on Tuesday. The RBA has recently made it clear the health of the labour market will be a determining factor in its rates decision in coming months. Tomorrow’s speech will be the timelier of the two, as the governor can weigh in on last week’s data on wages and jobs. Money markets are currently pricing in a 60 per cent chance of a rate cut in June.
1.2bn shares have changed hands so far, worth a well above average $4.1bn. 582 stocks are up, 439 down and 362 are flat.
Published by CommSec