A change of government often brings a change of attitude to investment markets.  For the Australian market, it is likely to respond favourably to the change of government. In recent history, Australian shares have generally risen after federal elections. However, it must be noted the Australian share market performed strongly in August which can pose the question of whether the anticipated change of government has already been factored into the market.

The new government has tabled its desire to implement some key policy changes. These include: cutting taxes, namely the mining and carbon taxes, a focus on increasing productivity and committing more funds to infrastructure spending. These policies are seen to be supportive to businesses and business confidence. 

 NAB’s business survey showed that business confidence in August shot up to 6 from -3 in July, the highest reading since May 2011.  Since the election the Australian dollar has also found support, bouncing back to near 93 US cents.

 The last few months there has been a feeling in the air of “let’s wait and see what happens at the election.” Now that the election has been fought and won, let’s hope confidence continues to improve and business can get on with the job. A new government will bring an element of certainty which we anticipate will have a positive impact on the market.