S&P/ASX 200 (INDEXASX:XJO) is trading up 1.40% or 89.1 points higher 6454.4 at 12.20pm being led by bank stocks with the big four all trading over 5% higher.
Both the S&P 500 Index (INDEXSP:.INX) and the Nasdaq Composite (INDEXNASDAQ:.IXIC) finished lower last Friday but the local market is being driven by a shock election win.
With the media, election polls and bookmakers all suggesting a comfortable Labor victory leading into Saturday, investors were likely already positioned for their policy changes.
It has been no secret that a lot of fund managers have been underweight bank stocks and a Labor government was seen as a further headwind for the banks.
On the open today, investors were scrambling into the bank stocks – ANZ (ASX:ANZ) hit a high of 7.7%, Commonwealth Bank (ASX:CBA) 6.7%, Nation Australia Bank (ASX:NAB) 8.4% and Westpac (ASX:WBC) hitting 8.9%.
WAAAX not moving with the market
Previously the tech stocks have moved in sync with the market but that has not been the case today.
Wisetech (ASX:WTC) is down 3.1%, Altium (ASXLU) down 2.55%, Appen (ASX:APX) down 1.55%, and Xero (ASX:XRO) down 2.58% at 12.29pm.
Are the banks an endorsement for Australian housing?
With the Australian people not giving Labor the nod, one policy that won’t see daylight is changes to negative gearing, which was tipped to accelerate the decreasing house price index.
With the Coalition government retaining power and today’s strong move back into bank stocks, which generate the majority of their earnings from residential mortgages, is the expectation that the housing market bounces?
There is undoubtedly a recovery in short-term confidence, which will play a role in encouraging buyers back into the market.
That said, it will be at least a couple of months before we see evidence of this flow through to published data.
This coming Saturday’s weekly auction rates will be the first test.