Following the results of the federal election, the big four banks and private health insurers are surging — seemingly taking a large, deep breath after being cleared of a Labor win.
Just after midday, the benchmark ASX 200 share index hit 1.6% higher at 6,468, which the ABC reports as being the highest level we’ve seen since late 2007 — otherwise known as the calm before the storm of the Global Financial Crisis.
Now, if you’ve read anything we’ve been feeding you — or even if you’re new to the party, we’d guess you’d probably agree that this fact isn’t necessarily a sign of great things to come.
Banks recover…but for long?
At time of writing, we are seeing the following — National Australia Bank Limited [ASX:NAB] trading at $25.76 (+7.69%), Australia and New Zealand Banking Group Limited [ASX:ANZ] at $27.73 (+7.27%), Commonwealth Bank of Australia [ASX:CBA] up $77.45 (+6.34%) and Westpac Banking Corporation [ASX:WBC] at $27.60 (+8.61%).
Surely, it seems, the banks would be pleased about a Liberal win — as Labor would have employed a strategy to decrease their earnings. During the campaigning season, we heard Bill Shorten promise to limit negative gearing and reduce their capital gains discount. In fact, without being too harsh, it seems that the markets believed that a Labor win would have been catastrophic to the economy.
We are also seeing a positive increase in the property sector after the weekend as the Labor threat of negative gearing is removed. ABC reports that real estate agency McGrath Ltd [ASX:MEA] enjoyed a jump up 24% to $0.26 in their share price after opening. This, as well as the combined promise from both major parties to decrease housing deposits by 5% may encourage home buyers to launch themselves into an already scared market.
We can also report that Private Health Insurers are up, following a dangerous period. Today, Medibank Private Limited [ASX:MPL] increased by 11.46%, bringing their share price to $3.21. The Aussie dollar has also risen by about half a cent to 69.18 US cents.
In light of the royal commission, and the rebate costs for wronged customers, the spike comes as a breath of fresh air for bankers and blue chip holders alike.
But take notes of the fact above, investors. Nothing is ever certain. And these greens could well and truly be a sign of something much more sinister around the corner…
For Money Morning