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Surprise Coalition victory sparks rally


The Australian sharemarket has rallied to a fresh 11.5 year high, as investors responded to the Federal Election result.


The Coalition’s surprise re-election stamped out the threat of dividend imputation changes and capped health insurance premiums, commented CommSec.

 The ASX 200 (XJO) closed at the day’s highs, up 110 points or 1.7% to 6,476 – its best one-day improvement in three months.

“The banks provided the market with the biggest boost, as the financial sector surged 5.9%. Westpac Bank (WBC) jumped 9.2% to $27.75, while ANZ Bank (ANZ) climbed 7.8% to $27.86.

“Health insurers recorded double-digit gains as investors cheered news that Labour’s plan to cap price increases at 2% for two years won’t go ahead. NIB Holdings (NHF) rallied 15.8% to $6.82, while Medibank Private (MPL) soared 11.5% to $3.21.

“Companies exposed to the home building sector also got a boost: Boral (BLD) rose 4.7% to $4.91 and Stockland (SGP) gained 4.8% to $4.12.”

 · In other news, Elders (ELD) closed down 0.5% to $6.55 after reporting a 34% slump in first-half profit to $27.4 million, while revenue slipped 12.4% to $737.5 million. The diversified agriculture company’s earnings were impacted by hot and dry weather. However, better winter cropping conditions has provided optimism for the second half.

 · Regis Healthcare (REG) finished down 0.3% to $3.12 after announcing Mercy Health executive Linda Mellors will take over as CEO and Managing Director in August.

 · Lynas Corp (LYC) announced it had signed a joint venture agreement with America’s Blue Line Corp. to work together to develop a new rare-earths processing plant in the Texas. LYC shares slipped 1.3% to $1.97.

· Scentre (SCG) closed up 0.3% to $3.85 after announcing it had sold a 50% stake in Sydney's Westfield Burwood shopping centre to Perth-based Perron Group for $575 million. The proceeds will be used to repay debt.

 · Incitec Pivot (IPL) shares tumbled 2.7% to $3.24 as the fertiliser manufacturer slashed its interim dividend after reporting a 72% plunge in first-half profit to $42 million due to the north Queensland floods. IPL will pay an interim dividend of 1.3 cents per share, down from 4.5 cents per share a year ago.

 · 2.33b shares were traded, worth $8.78b. 612 stocks closed higher, 533 finished weaker, while 396 ended unchanged.

· Looking ahead, the Chicago Federal Reserve National Activity index will be released.


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