Australian markets assume business as usual under new govt

Australian markets assume business as usual under new govt

Australian financial markets offered a muted reaction to a change of federal government on Monday with the outcome already priced in and no radical change in economic course expected.

The victory of the centre-left Labor Party after nine years of rule by the Liberal National Coalition had been flagged by opinion polls for weeks. It also seemed likely Labor could hold majority control and thus avoid a hung parliament.

"A majority Government carries the advantage of more certainty around the policy formation process and the Government's fiscal strategy more broadly," said Gareth Aird, head of Australian economics at CBA.

"In our view there was little proposed by the incoming Government during the election campaign that at this stage requires us to revisit our economic forecasts," he added.

In particular, he saw few implications for the independent Reserve Bank of Australia (RBA) which this month began its first tightening cycle in more than 11 years.

The market continues to wager on another quarter-point rate increase to 0.60% in June, and a string of moves to around 2.5% by year end.

The Australian dollar was 0.7% firmer at $0.7088, though that had more to do with an improvement in global risk appetite than the election.

The ASX 200 share