Commonwealth Bank shot 6.3 per cent higher to $77.40, Westpac advanced 9.2 per cent to $27.75, ANZ climbed 7.8 per cent to $27.86 and NAB added 7.9 per cent to close at $25.81. Macquarie Group shares rose 1.7 per cent to $121.98.
Private health insurers and hospital operators were also much firmer following the election result, with a looming cap on premium rises now no longer on the horizon. Medibank Private shares advanced 11.5 per cent to $3.21, NIB Holdings added 15.8 per cent to close at $6.82 and Ramsay Health Care ended 7.3 per cent higher at $69.58.
Mortgage brokers also closed the session firmly higher. Mortgage Choice soared 14.5 per cent to 91¢ and Australian Finance Group added 6.7 per cent to close at $1.28.
Iron ore stocks rose as the price of the bulk commodity topped $US100 a tonne for the first time since May 2014. Rio Tinto firmed 1 per cent to $102.40 and Fortescue Metals Group added 3 per cent to close at $9.22.
Coal stocks were also stronger. Whitehaven Coal rose 1.4 per cent to $4.30, Coronado Global Resources advanced 2.2 per cent to $3.25 and New Hope Corp closed at $2.78, up 1.8 per cent.
Sydney Airport shares slid 4 per cent to $7.51 on Monday after reporting disappointing domestic numbers last month. In April, domestic passengers fell by 1.3 per cent compared to the previous year.
Incitec Pivot shares fell 2.7 per cent to $3.24 despite reporting a better-than-expected first-half underlying profit of $41.9 million. The company said gas costs at its Gibson Island fertiliser plant would be $49 million higher this year and the plant could be shut down if cheap gas cannot be sourced.
Webjet slid 7.7 per cent to $15.50 after Thomas Cook’s shares fell 40 per cent in London on Friday following Citigroup’s decision to give the company a price target of zero. In a note on Monday, Morgan Stanley warned Webjet’s relationship with Thomas Cook could mean it loses up to 13 per cent of its total wholesale volumes.
Energy stocks were weaker as the price of oil slipped slightly. BHP Group fell 0.7 per cent to $38.21, Woodside Petroleum slid 0.4 per cent to $37.05, Beach Energy declined 0.5per cent to $2.09 and Oil Search closed 0.7 per cent lower at $7.70.
Morgan Stanley upgraded NAB from ‘equal-weight’ to ‘overweight’ following the federal election result, with the broker saying a Coalition government reduces tail risks in relation to credit quality, the mortgage market and regulatory environment. The broker noted many positives for the bank, saying it offered sound retail and business bank franchises performance, better capital generation, scope for flat underlying expense growth and an improved risk profile relative to its peers. «With potential for better business conditions, lower tail risk on credit quality and more valuation support, we upgrade NAB to ‘overweight’,» analyst Richard Wiles said. Morgan Stanley increased its price target on NAB from $25.10 to $25.70.
What moved the market
The global and local tech sectors looks very overvalued, according to QV Equities co-portfolio manager Anton Tagliaferro, who said he’s seeing signs the market could be in a similar position to what it was prior to the early 2000s tech wreck, with low-earning companies trading on high valuations. «Almost 80 per cent of all new floats of companies (mainly IT companies) in the US in 2018 have been floated off despite being unprofitable,» he said. «This sort of percentage hasn’t been seen since the 2000/2001 tech boom – which as many remember ended in tears for investors who had invested in the IT sector.»
The price of iron ore rose to its highest level in five years on Friday, pushing above $US100 a tonne, its highest level since May 2014. CBA mining and energy commodities analyst Vivek Dhar said prices could remain elevated for some time to come. «Falling iron ore port stockpiles, together with resilient steel mill margins and higher steel operating rates are now supporting iron ore prices,» he said. «Given the scope for China’s iron ore port stockpiles to fall further, we could see prices stay above $US100 a tonne for a little longer yet.
The Australian dollar rose as much as 1 per cent on Monday following the re-election of the Coalition. The Aussie had ended trade at US68.60¢ on Friday but soared as high as US69.28¢ once trading began on Monday. While it gave up some of those losses within the first few hours of trading, it rebounded to be sitting at US69.22¢ in the afternoon. «Had it not been for the election, it would have been difficult for the Aussie to resist the headwinds from trade wars and with [RBA Governor Philip] Lowe’s speech looming,» said NAB senior economist David de Garis.
Coal stocks were among those moving higher on Monday following the Coalition win, with the Australian coal industry welcoming Scott Morrison’s re-election. «The government has been a consistent supporter of the sector and has recognised its valuable economic contribution as a major employer, the provider of tax revenue and royalties and at $66 billion our largest export earner,» said Coal Council of Australia chief executive Greg Evans. He also noted the strong swings against Labor candidates in coal-related electorates in both NSW and Queensland.
William McInnes covers markets from Sydney including editing the Markets Live blog.