ASX: Local share market surges after Scott Morrison election win

Written by The ReReport
As seen in the Source link, written by on 2019-05-20 11:45:10

The Coalition’s surprise election win has given local stocks a healthy shot in the arm, sending the Australian share market surging to a fresh 11-year high.Bill Shorten and his proposed changes to negative gearing, capital gains tax and franking credits had been perceived on the market as detrimental.media_cameraASX 200 has jumped to an 11-year high.Many had assumed the Labor Party would win and had taken a defensive position anticipating the effects of sweeping policy reforms, CMC Markets chief market strategist Michael McCarthy said.“Whether or not it’s true, generally investors believe that the economy will serve better under a conservative government,” he told“But the most important factor is that muted changes to franking credits will not come through.“The banks are one of the key sources of frank dividends, as opposed to unfranked, and they were under real pressure as we led into the election.“Now that those changes are off the table, investors are piling back into the highly franked dividends that the banks offer.”Scott Morrison’s pitch to leave property and taxing policy alone sent banking stocks soaring on Monday morning, with the four major lenders all jumping more than 5 per cent.In the first 15 minutes of trading, ANZ was up 6.15 per cent at $27.44, Commonwealth Bank was up 5.45 per cent to $76.80, NAB was up 6.77 per cent to $25.54, and Westpac was up 7.99 per cent to $27.44.The benchmark ASX 200 index was up 1.4 per cent to 6451.0 points at 10.15 AEST, while the broader All Ordinaries was up or 1.3 per cent to 6542.4.Mr McCarthy said the re-election of the Coalition is a real change from what the market was preparing for, which will provide steady confidence for investors for period to come.“It was conventional wisdom that Labor would form government and so a lot of the policies that had been announced were somewhat priced,” he said.“Investors weren’t putting the full weight of those potential policy changes into the market because there were always concerns that the senate would prove a difficult beast to negotiate.“But there was certainly some defensive positioning ahead of the election so this could lead to a rerating.”The Coalition’s plans to leave trailing commissions for mortgage brokers in place, despite the royal commission’s final report pushing for it to be scrapped, was a boost for those institutions.Mortgage Choice surged more than 16 per cent.The Aussie dollar is buying 69.03 US cents, from 68.89 US cents on Friday.Continue the conversation on Twitter @James_P_Hall or published as ASX skyrockets after Liberal win