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‘Buy everything’: Market tipped for post-election sugar hit

Dr Oliver said the Coalition win removed uncertainty on excess franking credits, changes to negative gearing and capital gains tax adversely affecting the property market, and increased industrial relations regulation.

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The shock result has wide-ranging implications for a slew of listed companies, from banks to builders and resources firms, with Labor’s plans to scale back tax incentives for investors and take tougher action on climate change now dead.

Property-related shares, banks and retail shares could be the key beneficiaries, he said.

“Against this though the Australian share market has already performed pretty well over the last few months and is likely be dominated by issues around global trade, slowing growth, interest rates and the iron ore price and so will quickly move on from the election I suspect,” Mr Oliver said.

James Whelan, investment manager of VFS Group’s global macro fund, agreed that the result could be positive.

“Markets hate uncertainty and now you’ve just ripped all that uncertainty out of the market. Buy everything,” he said.

Mr Whelan predicted coal miners would rally as the coalition is more friendly to the fossil fuel than Labor, said Whelan.

Ratings agency Fitch Ratings expects the re-election to bring broad policy continuity, with the federal government forecast to reach an underlying cash surplus by next financial year.

A challenging economic environment poses risks to this outlook, Fitch associate director Jeremy Zook said.

“The economy is slowing and the unemployment rate has inched up, which could weigh on fiscal revenues,” he said.

“A sharper economic slowdown could also lead to pressures for greater fiscal stimulus.”

Mr Zook said the likely continued need for crossbench support in the Senate could limit the government’s ability to advance some of its policy priorities.

“This poses additional risks to the budget outlook and the government’s ability to tackle medium-term economic reforms.”

Reserve Bank of Australia governor Philip Lowe will deliver a speech in Brisbane on Tuesday, immediately after the release of the minutes of the bank’s May board meeting when it kept the cash rate at a record low 1.5 per cent.

There is scope for lower rates to support the economy,

NAB economist Kaixin Owyong

Dr Oliver expects both events will signal some sort of shift towards an easing bias on interest rates ahead of rate cuts in the months ahead.

National Australia Bank economists expect Mr Lowe will emphasise the bank’s easing bias and pave the way for a rate cut in June.

“We expect Lowe to point out that the bank’s strategy – lower unemployment leading to higher wages, supporting both consumer spending and inflation – has not played out, such that there is scope for lower rates to support the economy,” NAB economist Kaixin Owyong said in a note.

AAP, Bloomberg

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