Read The Times Australia

Daily Bulletin

Going up. Monday showed what the market thinks of Morrison

  • Written by: Mark Humphery-Jenner, Associate Professor of Finance, UNSW
Going up. Monday showed what the market thinks of Morrison

There's other obvious reason for the jump.

The coalition’s shock victory pushed up the S&P ASX 200 by 1.7% – the biggest one-day surge since Kevin Rudd was elected prime minister in 2007.

The ASX 200 measures the price of Australia’s 200 biggest public companies. The jump pushed up the value of shares across the entire market by A$33 billion. The price of one of the banks jumped 9%.

All of the polls leading up to the election had had Labor ahead, with Labor apparently widening its lead in the final few days.

Punters placing bets also overwhelmingly favoured Labor. Sportsbet was so confident of a Labor victory, it paid out bets on Labor early.

Which Monday’s jumped was the reaction to a surprise.

The market had been expecting a Shorten victory. It had to suddenly reprice after discovering it was a Morrison victory.

Going up. Monday showed what the market thinks of Morrison ASX 200, May 14 to May 20. Yahoo Finance

Nothing else can explain the surge

It’s pretty clear that the jump didn’t reflect anything else, for two reasons:

  • it is surprises rather than what was already known that moves markets, because everything else is already priced in, and the coalition victory was the only big surprise between the close of business on Friday and the start of trade on Monday

  • we are able to compare the ASX movements with those on other markets ahead of Monday’s opening. The ASX normally follows other markets unless there is a clear (local) reason to do otherwise. In this case, the indexes in the United States, Britain and Canada had all fallen in their most recent sessions before Monday’s opening. By contrast, the Australian indexes jumped sharply, suggesting a very strong positive reaction to only big piece of local news since the foreign markets closed

Others down, Australia up

Going up. Monday showed what the market thinks of Morrison Returns on Friday May 17 in the US, Canada and UK, on May 20 in Australia. Red = foreign indexes. Green = Australian indexes

Why such a strong reaction?

It’s hard to be sure, and different government policies affect different industries differently. But there are common threads:

Property effects: Labor’s capital gains tax and negative gearing tax policies might have hurt property prices.

The prospect of prices somewhat stronger than they might have been means the prospect of a softening in the decline in construction, and better employment prospects than otherwise, which would mean better economic growth than otherwise. Stronger property prices bolster consumer confidence, supporting spending indirectly, and can also support it directly making it easier for consumers to tap into equity in their homes.

Tax factors: The market generally reacts well to tax cuts. This was the case with Trump’s tax cuts in the United States, in part because of the expectation that they would boost the economy. The market generally dislikes tax increases. While it is not clear whether the Coalition’s promised longer-term tax cuts will materialise, the Coalition has plans for longer-term tax cuts that Labor didn’t.

Labor’s dividend imputation policy would have harmed retirees’ incomes. With it off the agenda they can have the confidence to spend and hold shares that they had before.

Banking and finance: The coalition is generally seen as more concilliatory towards the banking sector, being reticent to impose major penalties after the banking royal commission, and reluctant to hold it in the first place. The price of the big four banks surged on Monday. The Commonwealth Bank jumped the least, 6.3%. Westpac jumped 9.2%.

Mining and energy: Labor was perceived as hostile to mining and resource companies. Several recorded strong price gains. Its seeming reluctance to acknowledge the costs of its climate change policies can’t have helped.

We can’t know for sure

Other factors might might have included the Coalition’s approach to infrastructure and to unions, which are generally regarded as business friendly.

Often traders react to what they think other traders will do rather than to anything fundamental. But it’s fair to say that, to start with, they were feeling good.

Authors: Mark Humphery-Jenner, Associate Professor of Finance, UNSW

Read more http://theconversation.com/going-up-monday-showed-what-the-market-thinks-of-morrison-117396

Business News

The Business Case for Choosing Australian Fabricators Over Imported Alternatives

For a long time, you might have defaulted to overseas suppliers when sourcing fabricated metal components for a project. The unit price was lower on paper, and the maths seemed straightforward. That...

Daily Bulletin - avatar Daily Bulletin

Australian organisations are relying on business continuity plans built for a far more predictable world

Tariff escalations, supply chain fragility, geopolitical events, and the ongoing threat of cyber disruption have reshaped the risk environment facing Australian organisations. The problem is that ma...

Daily Bulletin - avatar Daily Bulletin

How to Rent a Car for Uber in Melbourne: What Every New Driver Needs to Know

Starting out as an Uber driver in Melbourne is not as complicated as it sounds but getting the vehicle right is where most new drivers get stuck. Uber has strict requirements around vehicle age, condi...

Daily Bulletin - avatar Daily Bulletin

When Should You Speak to a Lawyer About a Legal Issue?

Legal issues can begin with a simple question, then become harder to manage once formal steps are involved. Many people wait until a matter feels urgent before seeking guidance, even though earlier ...

Daily Bulletin - avatar Daily Bulletin

The strategic rise of Bali as Australia’s next essential healthcare support hub

As Australian healthcare providers grapple with unprecedented operational bottlenecks, a new nearshore model is quietly transforming patient care delivery. Forward-thinking organisations,  including...

Daily Bulletin - avatar Daily Bulletin

Cost Savings and Benefits of Using Used Pallets in Logistics

In today’s competitive logistics and supply chain industry, businesses are constantly looking for ways to reduce operational costs without compromising efficiency and reliability. One of the most prac...

Daily Bulletin - avatar Daily Bulletin

How Fulfilment Services in Australia Help Businesses Scale Efficiently

The growth of e-commerce and modern retail has transformed customer expectations. Consumers now expect fast shipping, accurate order processing, and seamless delivery experiences regardless of where...

Daily Bulletin - avatar Daily Bulletin

Practical Ways Australian Workplaces Can Reduce Operating Costs

Reducing business costs doesn’t always mean cutting staff, shrinking services or making the workplace feel bare-bones. In many cases, the smarter savings are hiding in everyday operations: the light...

Daily Bulletin - avatar Daily Bulletin

Executive Recruitment Solutions That Help Organisations Secure Exceptional Leaders

Leadership has a direct impact on organisational performance, employee engagement, strategic growth, and long-term success. Businesses operating in increasingly competitive environments require experi...

Daily Bulletin - avatar Daily Bulletin

The Daily Magazine

What Happens After You Lodge a BYDA Enquiry? The Step Most Excavation Projects Miss

Every excavation project in Australia — from a backyard deck footing to a multi-storey commercial bu...

How to Choose the Right Dentist on the Gold Coast

Finding a dentist you trust is one of those decisions that quietly affects your health for years, ...

The Hidden Engineering Problem Inside Australia's Older Housing Stock

A significant share of Australian homes were built for a way of living that no longer exists. Houses...

DIY Rodent Control Vs Professional Help: When Is It Time To Call The Experts?

Rodents are one of the most frustrating pest problems for Australian property owners. Rats and mic...

Lighting Shop in Perth: How The Right Lighting Can Transform Your Home And Business

The right lighting can completely change the look, feel, and functionality of any space. Whether it ...

Traffic Light System Solutions For Safer And More Efficient Traffic Management

Modern cities and growing communities rely heavily on effective traffic management to ensure safety...

Gold Migration Lawyers in Liquidation: How the Closure Affects Your ART Appeal

If your appeal was with Gold Migration Lawyers, a recent change to how the Tribunal decides cases ...

The pressure cooker: life in urban Australia in 2026

Australian cities have always been demanding. Long commutes, rising housing costs, busy schedules a...

What Actually Makes a Good Criminal Lawyer in Melbourne

Most people only think about this question once. That is usually too late. Most people charged wi...