Australian market is waiting for the elections to be held on Saturday, which would decide the forthcoming Government. With none of the parties getting the majority for the first time in 70 years, the stock market may be banged.
The investors are speculating over the elections that may end the uncertainty or bring more volatility in the stock market. As expected by analysts of the stock market, on Monday the market would open lower and would remain lower in its second move with the participation of foreign investors; after that it is expected to gain some stability.
Shane Oliver, Senior Economist at AMP Capital Investors in Sydney, said, “Coming at a time of renewed concerns regarding the global economic outlook, the Australian election outcome will likely add to local investor nervousness”.
As expressed by Tim Schroeders, who managed around $1.1 billion at Pengana Capital Ltd. in Melbourne, the suspension of Parliament poses some threat to the market and that’s why he would consider mounting the amount of offshore shares till the political condition in the country stabilizes.
The political uncertainty along with the risk of medium term fiscal slippage would also impact the currency, as stated by Su-Lin Ong, Senior Economist at RBC Capital Markets Ltd. in Sydney.
It has been expected that on Monday the Australian Dollar would open around the last week’s low of US$0.8860 from its present threshold of US$0.8931.
David Cassidy, Chief Strategist at UBS, expressed that the week coming will show a lot of volatility in the market. But if Tony Abott wins the election, who backs the mining tax, there are chances of boom in the stock market.
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