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

The coalition’s shock victory pushed up the S&P ASX 200 1.7%. The ASX 200 measures the price of Australia’s 200 biggest public companies. The major banks surged by much more – Westpac climbed 9.2%.

All of the polls leading up to the election 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 means the market jumped in surprise first thing on Monday.

It had been expecting a Shorten victory, and had to suddenly reprice after discovering it had been a Morrison victory.

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

It didn’t jump for other reasons

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

  • it is surprises that move markets, because everything else is priced in, and the coalition victory was just about the only surprise over the weekend

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

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 might help arrest the decline in construction which might help generate employment, which might boost economic growth. Stronger prices bolster consumer confidence and support spending. They can also support it directly as people tap into equity from their homes.

Tax factors: The market generally reacts well to tax cuts. This was the case in the US as Trump’s tax cuts became increasingly likely. This is due in part to 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, they have plans for them that Labor didn’t.

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

Banking and finance: The coalition is generally seen as more concilliatory towards the banking sector, being reticent to impose major penalties following the royal commission, and disinclined to commence it to begin with. The share price of big four banks increased significantly: from 6.27% for the Commonwealth through to 9.21% for Westpac.

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 include the Coalition’s approach to infrastructure and to unions, which are generally business friendly.

Often markets react to what they think markets will do, rather than to anything real. But it’s fair to say that, to start with, they are feeling better.

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

How Telematics Helps Australian Companies Improve Productivity

Operating a commercial fleet in Australia is a uniquely demanding endeavour. Between the sprawling urban sprawl of cities like Sydney and Melbourne and the immense, unforgiving stretches of the Outb...

Daily Bulletin - avatar Daily Bulletin

Inside the Icon: The BridgeMuseum Officially Opens at the Sydney Harbour Bridge

A bold new way to experience one of Australia’s most recognisable landmarks has arrived, with BridgeClimb Sydney officially opening the all-new BridgeMuseum.  Located inside the Sydney Harbour Brid...

Daily Bulletin - avatar Daily Bulletin

Is Your Brand Showing Up in AI Search? Most Melbourne Brands Aren't.

The New Front Door Nobody Told You About Something changed. Quietly. Without a press release. The way buyers find businesses in Australia has been rewired. Not replaced, rewired. Google isn't dead...

Daily Bulletin - avatar Daily Bulletin

How Australian Businesses Can Measure SEO ROI

SEO can feel vague when you are staring at a dashboard full of numbers that do not clearly connect to revenue. The key is to measure the right signals in the right order, then tie them back to outcome...

Daily Bulletin - avatar Daily Bulletin

How Commercial Roller Shutters Improve Site Security Without Slowing Operations

Security upgrades can be frustrating when they make everyday work harder. A door that takes too long to open, creates bottlenecks at shift change, or fails at the worst time can turn “better protectio...

Daily Bulletin - avatar Daily Bulletin

Why a Document Destruction Service Still Matters for Modern Businesses

Businesses generate large volumes of information every day, from staff records and contracts to invoices, reports and customer files. While attention often focuses on how documents are stored, the way...

Daily Bulletin - avatar Daily Bulletin

Bicycle Rack Safety and Space-Smart Storage

Bike storage problems usually show up as small annoyances first: tangled handlebars, scratched frames, and bikes that topple when you pull one out. Over time, those issues become safety risks, especia...

Daily Bulletin - avatar Daily Bulletin

How to Tell if a Childcare Centre Is a Good Fit for Your Child

Choosing childcare can feel like you’re making a huge decision with limited information. Tours are short, centres are often on their best behaviour, and your child might act differently in a new space...

Daily Bulletin - avatar Daily Bulletin

Car Import Timeline: What Usually Happens at Each Stage

Importing a car into Australia can feel confusing because multiple agencies and checkpoints are involved, and the timeline is shaped as much by paperwork quality as it is by shipping speed. The most u...

Daily Bulletin - avatar Daily Bulletin

The Daily Magazine

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...

Why Working With A Chatswood Tutor Can Improve Academic Performance

Academic expectations continue increasing for students across primary school, high school, and senio...

Is It Worth Getting Solar Panels in Melbourne?

The real question is not whether solar works in Melbourne. It works. The question is what it is co...

How A Diploma Of Project Management Builds Practical Skills For Modern Work Environments

Developing the ability to plan, execute, and deliver outcomes efficiently is a key requirement in to...

How to Choose the Right Football for Every Level

Choosing a football may seem straightforward, but the right option depends on who will be using it a...

What to Ask a Wedding Photographer Before You Book

Booking a wedding photographer can feel deceptively simple: you like the photos, you like the vibe...

Why Stress Relief For Dogs Is Essential For Emotional Balance And Long-Term Wellbeing

Managing emotional health is just as important as physical care when it comes to pets, which is why ...