Australian stocks hit the highest level since late 2007 as financials surge
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Australian stocks have surged to the highest level since December 2007, propelled higher by a surprise win for the ruling Liberal-National Coalition in the recent federal election.
Financials are doing particularly well, on track to record the largest one-day percentage gain since November 2008.
The benchmark ASX 200 currently sits at 6452.1 points — up 1.36% from Friday’s close — extending the rally from the recent lows struck late last year to nearly 20%.
The gains are being led by financials which have rallied close to 5%, helped by a rotation of capital from other sectors.
Only consumer staples and consumer discretionary are trading higher at this point.
Despite strong gains in iron ore and crude oil prices in recent days, both the materials and energy sectors are also trading marginally weaker early in the session.
“With the return of the Coalition with its more pro-business policies and uncertainty now removed around changes to excess franking credits, changes to negative gearing and capital gains tax adversely affecting the property market and increased industrial relations regulation its possible we will see a bit of a short-term bounce in the share market,” said Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital, before the market opened.
“Property related shares, banks and retail shares could be the key beneficiaries.”
Analysts at Fat Prophets also agreed that the surprise election result will help to boost sentiment among investors.
“The election win by the Libs will be well received by the markets with a range of issues that had been causing consternation amongst investors, such as changes to franking credits through to negative gearing, pushed to the sidelines,” the group said in a note.
“The fact that some of the causes of instability in the Liberal party have gone will be well received by the markets because Australian politics needs some stability and consistency after a decade of volatility.”