Trading Room home page

Markets unsurprised by PM's election call

Market watch top headlines

Australian reports

World reports

Stocks to watch

GXL, HVN, NAB, QAN, TSE, VAH, WOW,

AAP

2013-01-30

Investors don't really care which political party runs the country as long as they provide a stable investment climate.

City Index chief market analyst Peter Esho said Prime Minister Julia Gillard's selection of Saturday, September 14 as the date for the next federal election was unsurprising.

"That's within the ballpark range of probable dates that most forecasters were assuming," Mr Esho said.

"Everyone was assuming that this government would try to go as long as it can into its term, so there's no real surprise with September."

The Australian stock market and dollar had a muted reaction to Ms Gillard's poll date announcement, which came shortly before 1300 AEDT on Wednesday.

Mr Esho said the decision to go to the polls in September could indicate the federal government was not too concerned about its budget situation.

He said there had been no policy announcements accompanying the announcement of the election date, which may indicate that the government could have some surprises up its sleeve when Treasurer Wayne Swan announces the federal budget on May 14.

"One of the biggest issues weighing on the market has been political instability, not necessarily who holds government," Mr Esho said.

"It's the fact that we have a hung parliament and legislation has been so difficult to pass through.

"The clearing up of that either way, regardless of who wins, will be seen as a positive."

Mr Esho said the announcement of the election date was unlikely to drive the share market up or down, with the February earnings season the main influence for investors.

Wesfarmers managing director Richard Goyder was taken by surprise by Ms Gillard's announcement.

He learned about the September 14 poll date while explaining Wesfarmer's second quarter sales results to journalists.

"It isn't that a footy final, or semi final," he said when asked by a reporter what his reaction was to the poll date.

"It's going to be a long campaign."

Economists said while knowing the election date provided certainty for businesses and investors, consumer confidence could take a hit.

"From a consumer perspective I think a long, drawn out campaign could distract from what looks set to be a very upbeat 2013," CommSec economist Savanth Sebastian said.

JP Morgan Australia chief economist Stephen Walters said having the September 14 date would take away uncertainty for businesses.

"It's positive in the sense that is is very clear line in the sand and it takes away the uncertainty of an early poll," he said.

"If people were holding off making investment decisions or firms weren't hiring or investing because they weren't sure when the election would be then there is a little more clarity on that."

But he was concerned both the government and the coalition would become `distracted' by a long election campaign.

"Campaigns are always a distraction so there is a risk that rather than governing, the government and the opposition get caught up in a very very long fight-to-the-death election campaign."

Trevor Chappell, Evan Schwarten and Kylie Williams